26 Apr 2007

Marshalls power utility hopes bank loan will stave takeover bid

2:10 pm on 26 April 2007

Officials of the Marshalls Energy Company say a twelve million dollar loan from Bank of Guam will resolve a cash crisis that has plagued it for nearly two years and stave off a takeover bid from South Korean energy giant, SK Networks.

A three-member team from SKN is expected to arrive in Majuro later this week for continuing negotiations on a $12 million offer to the MEC for a controlling interest in its large fuel tank farm, the only such government-owned facility in that part of the north Pacific.

Since the utility company's 13-year fuel supply contract with Mobil Oil Micronesia, collapsed following acrimonious negotiations in 2005, the Marshalls Energy Company has been in financial trouble.

Until 2005 the company subsidized relatively low electric rates by large volume sales of diesel to foreign fishing vessels

But that system collapsed when the supply deal with Mobil ended two years ago, forcing the company to dramatically increase power charges and to scramble for cash to pay off its fuel debts.