~ Says original financing plan in effect ~
PHILIPSBURG--Prime Minister Leona Romeo-Marlin decried the recent “speculation” in the media about new financing options for the reconstruction of Princess Juliana International Airport (PJIA) in her address at a press briefing on Wednesday, noting that this speculation has been fed by press releases from within government.
“Whatever the underlying intentions may be, the complex financial negotiations about the future of our international airport should under no circumstances be played out in the media. This action not only risks to discredit the government or derail the existing agreements with the World Bank, the European Investment Bank [EIB – Ed.], and the bondholders.
“What the speculations ultimately do is undermine the international image of this country and, as such, the investment climate of our island,” said Romeo-Marlin.
A press release from the Cabinet of Minister of Tourism, Economic Affairs, Transport and Telecommunications (TEATT) Stuart Johnson on Thursday, September 5, said that JPF Corporate Financing had made a presentation to PJIA’s management and supervisory boards, Vida Nova Pension Fund and Bank, and Johnson as government shareholder representative.
Vida Nova offered to repay existing bondholders and rebuild PJIA’s terminal building, including a United States (US) pre-clearance facility. The amount offered and its conditions were not made clear in the release. However, The Daily Herald understands that total financing of US $240 million was proposed during the presentation.
When asked whether the statements in her address referred to this press release, Romeo-Marlin did not confirm or deny, saying only that she keeps her statement “as is” and it “speaks for itself.”
In her address, Romeo-Marlin said government’s official position remains the same. The airport’s reconstruction will be financed with the available funding from the World Bank Trust fund, the EIB, and the government of the Netherlands, she said.
She added that PJIA’s management has informed the government that this also remains their official position. She noted that this approach has been formally approved by Parliament through the adoption of the 2019 budget.
“The grant agreement with the World Bank is ready and is expected to be signed shortly,” said Romeo-Marlin. The total amount of the World Bank grant is $72 million, which includes $50 million for reconstruction works.
Of the remaining funds, $21 million will go to liquidity support, “so the airport can fulfil its debt service obligations throughout the reconstruction in case of an external shock to passenger traffic as a result of another hurricane or US recession.” She also said $1 million has been allocated for project management.
According to Romeo-Marlin, the loan agreement with the EIB for $50 million is also ready and can be signed as soon as the 2019 budget goes into force.
“While the budget has been approved by Parliament, it only enters into force after the six-weeks-appeal-period of the Ombudsman … has expired and the budget ordinance has been published in the National Gazette,” she said. This is scheduled to happen on or after October 7.
The on-lending agreements between the government and PJIA are also ready to be signed, she said. Like the EIB agreements, these will also occur when the 2019 budget is in effect.
The total value of both loans is $122 million. Both will be for a period of 20 years, with an interest rate between 3.5 and 4.5 per cent, Romeo-Marlin said, adding that “the terms of these loans are extremely attractive and certainly not available on the commercial market.”
The EIB loan comes with a grace period of five years, she said. St. Maarten’s government will extend a grace period (no repayment on interest or principal) of eight years for on-lending of the World Bank loan, which expires in December 2027.
Separate from the $122 million, PJIA has also received $20 million from the St. Maarten and Netherlands governments in the last six months. “The airport has used a significant part of this bridge financing to avoid bankruptcy, to fulfil its payment obligations and to continue the ongoing works in the terminal,” said the Prime Minister.
In addition to PJIA’s physical reconstruction, Romeo-Marlin said the government and airport management remain strongly committed to improving the airport’s corporate governance. On request of the Council of Ministers, the National Recovery Programme Bureau (NRPB) has established a taskforce to develop corporate governance improvement plans for PJIA, she said. The taskforce consists of former notary Mike Alexander, lawyer Frank Kunneman, economist Rob van den Bergh, and Secretary-General of St. Maarten’s General Audit Chamber Joane Dovale-Meit.
Romeo-Marlin also said other financial arrangements can be made regarding PJIA.
“While the financing of the airport reconstruction is being finalised, the Minister of Finance and the airport continue to explore other financial avenues, either as a backup or as additional funding for future investments in the airport. To date, no other financing has been committed and any information on these financial avenues remains strictly confidential due to the applicable non-disclosure agreements.
“These agreements are in place not to be secretive, but as standard best practice for these types of financial discussions,” she said.
At the end of her address, Romeo-Marlin emphasised that PJIA’s reconstruction work is ongoing.
“While money is sometimes seen as the solution for all of our problems, there’s no quick fix for the airport that any money can buy. All efforts are being made to accelerate the completion of the works in the fastest possible timeframe.
“We can do a ground-breaking tomorrow or on St. Maarten Day, we can derail the existing agreements and push for alternative and probably more expensive financing, but it will not speed up the works.
“This is not a matter of politics, or at least it should not be. This is a matter of the real time it takes our airport to complete a massive reconstruction project … in a safe and sound and sustainable manner,” concluded Romeo-Marlin.
Romeo-Marlin’s mention of ground-breaking on St. Maarten Day appears to refer to the Cabinet of TEATT’s press release last Thursday, in which it was said, “[a letter of interest and an agreement] could mean St. Maarteners will see shovels in the ground signalling the start of full reconstruction by November 11, St. Maarten Day, this year. This new offer will take PJIAE [the airport operating company] out of its default position by repaying existing bondholders.”