Government of the Federated States of Micronesia

CFC Loan Restructuring Proposal

PALIKIR, Pohnpei (FSM Information Service): September 16,
1997 – President Jacob Nena, on September 5, 1997, responded to a
letter of May 27, 1997, from Receiver for the Caroline Fisheries
Corporation (CFC), Nicholson Solomon, proposing to restructure CFC in
the form of recapitalization of the loan into equity.

Nena says that the need to diligently handle the matter in view of
the economic realities of FSM delays his response. The FSM is
undergoing restructuring in view of the doubtful economic prospects
for the government beyond 2001.

The newly FSM adopted Fisheries Policy, however, is emphasizing
privatization of government-owned fisheries enterprises which is
consistent with the government’s need to get back the money it loaned
to CFC within a reasonable time-frame.

Nena says it is imperative for the National Government to be
satisfied with the followings: an accounting audit that shows the
current financial standing of CFC; the CFC restructuring plan
includes its business plan; a feasibility study that ascertains that
privatization of CFC is feasible, and other things that may come up.

In closing, the President urged for an audit to be conducted by a
notable, independent firm endorsed by the National Government. And
that FSM looks forward to further collaboration with CFC until it is
satisfactorily resolved.