GPA Gets $5.1M Settlement from SEC Lawsuit Against BOA

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Guam – The Guam Power Authority is set to receive approximately $5.1M in settlement funds from a federal lawsuit by the Securities and Exchange Commission (SEC) involving the Bank of America. The settlement is related to interest income from funds held in reserve from the bonds issued during the late 1990’s.

In 1999, according to Randy Wiegand, Chief Financial Officer, when GPA issued $349 million of bonds, GPA also issued a bid for a guaranteed investment contract to maximize the amount of interest earned on the Bond Reserve Fund. In 2000, GPA broke the investment contract and entered into a new contract in which interest proceeds would be paid to the Authority on an upfront basis. This second contract is the subject of the SEC
investigation.

The Authority will be presenting options for the use of funds during the next regular CCU Board Meeting on the 14th of December.

“Amongst the options we plan to present for the use of the funds are 1) minimize the impact of any LEAC adjustment that is expected in February or 2) defer the Working Capital Fund Surcharge set to be effective in April of 2010,” remarked Wiegand, “We will also look at the need for additional investments in our plants as well. We will have to get our managers together and develop a recommendation to the CCU.”