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Litigation prevents approval of CPA loan application for runway repair

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THE litigation with GPPC Inc. over delayed rehabilitation work on Francisco C. Ada/Saipan International Airport runway is preventing the approval of Commonwealth Ports Authority’s loan application with the U.S. Department of Agriculture, a committee report said.

During a meeting on Thursday, CPA board financial affairs committee chairman, Ramon Tebuteb, said CPA Executive Director Christopher Tenorio was informed by the U.S. Department of Agriculture that it “will not be able to proceed with the loan underwriting or approval until the litigation with GPPC is resolved.”

Commonwealth Ports Authority board member Ramon Tebuteb, center, with board member Pete Reyes, Deputy Director Ed Mendiola, comptroller Skye L. Hofschneider, and other CPA officials and personnel during a meeting on Thursday last week.  Photo by Emmanuel T. Erediano

In 2016, GPCC Inc. sued CPA for breach of contract for rehabilitation of the airport runway. In the following year, CPA filed a counterclaim against GPPC for breach of contract, breach of the implied duty of good faith and fair dealing, negligent construction, violation of the Consumer Protection Act, and fraud.

In his report to the other members of the CPA board, Tebuteb on Thursday said CPA management is trying to obtain funds for the runway rehabilitation project from a local bank and through bond financing.

Like the USDA, Tebuteb said the bank is also concerned with the litigation and will review CPA’s finances “before moving forward.”

CPA’s Tenorio also met with Commonwealth Development Authority officials to discuss bond financing requirements.

CDA stated that in order to float a bond, CPA will need a bond underwriter, bond counsel, and a municipal advisor.

Additionally, CDA said, if the potential financing amount is above the originally approved $30 million, the CPA board will have to adopt another resolution to authorize the new amount.

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