TEATT Minister Ludmila de Weever (right) and PJIAE CEO Brian Mingo (second right) listening to MPs pose questions during Wednesday’s meeting.
~ Bondholders owed $81 million ~
PHILIPSBURG--Government is committed to the US $100 million combined World Bank and European Investment Bank (EIB) funding for the reconstruction of Princess Juliana International Airport (PJIA) and is not engaging in talks with alternative financiers, Minister of Tourism, Economic Affairs, Transport and Telecommunication (TEATT) Ludmila de Weever told Members of Parliament (MPs) on Wednesday.
De Weever’s statements came in response to questions posed by MPs during a meeting of Parliament’s Central Committee on February 15. Wednesday’s meeting was a continuation of the earlier meeting that discussed matters relating to PJIA.
De Weever told MPs that any alternative financing would have to be approved by the bondholders as per the agreement of the 2012 bond indenture, in which St. Maarten secured $132 million for major improvements to handle increasing passenger numbers at the island’s international gateway.
St. Maarten is no longer engaging in talks with alternative financiers because government, PJIA operating company PJIAE and PJIA holding company PJIAH have all agreed to the World Bank/EIB financing option, said De Weever.
There have been other offers, said De Weever, such as Piper Jaffray’s $224 million proposal in early 2019. This offer was ultimately rejected because the proposal was “not attractive for PJIAE,” she said. It had an interest rate of seven per cent, a $10 million higher annual debt service over the lending period, and a full pledge of all airport revenues.
Piper Jaffray – now known as Piper Sandler and Co. after its merger with investment bank Sandler O’Neill in July 2019 – sent a letter to a host of local officials earlier this month, saying it stands ready to implement its original plan when it was in talks with PJIAE.
The airport was also cash-strapped in early 2019. “In January 2019, the airport was running out of cash and received a bridge loan of first $5 million in January 2019, called emergency advanced funding, and an additional $15 million in March 2019. This totals a bridge loan of $20 million signed in March 2019. Also, in March 2019, the World Bank/EIB was engaged and a loan agreement was signed in December 2019,” said De Weever.
In September 2019, JPF Corporate Financing proposed $240 million to fund the reconstruction project in a presentation to PJIA officials, Vidanova Pension Fund and Bank and then-TEATT Minister Stuart Johnson.
However, this proposal was also rejected because “no sufficient or substantive funding was included in the proposals,” said De Weever. “At such time, the airport was already in final discussions with the EIB and World Bank.”
The World Bank and EIB financing did come with conditions. Because the World Bank portion was coming via the Dutch-sponsored St. Maarten Trust Fund, the Netherlands set some five conditions.
First, an interim chief financial officer (CFO) would be appointed for a period of two years through the Royal Schiphol Group. However, this person must also be in place for the duration of the reconstruction project.
The Netherlands would also appoint a member to PJIAH’s supervisory board. Additionally, the Council of Ministers was to appoint a corporate governance task force and adopt an implementation plan for the Corporate Governance Assessment conducted by the World Bank, job profiles for PJIAE’s and PJIAH’s supervisory and management boards were to be reviewed and upgraded to international standards, and there would be screening for all members of these four boards.
As for the World Bank and EIB, they asked PJIAE to appoint someone qualified to fulfil environmental and social safeguard requirements, as well as for evidence of sufficient funds to complete the project and to maintain qualified staff to coordinate and manage the project.
There is a 0.5 per cent non-utilisation fee attached to the $50 million EIB loan, De Weever told MPs. Considering that these funds have been available since April 2020, some $250,000 would be due in April 2021, said PJIAE chief executive officer (CEO) Brian Mingo.
As of Monday, some $81 million is still owed to the bondholders from the 2012 indenture, said De Weever, who added that Royal Schiphol Group has no plans to buy them out. Guggenheim Investments, insurance company CIGNA and CIBC FirstCaribbean International Bank hold about 90 per cent of the outstanding bonds.
Government’s current concession agreement to PJIAE is valid until 2030, said De Weever. “Any changes in the concession should be discussed with the bondholders. … There are no negotiations with [Royal – Ed.] Schiphol group to manage the concession,” she said.
The transfer of assets between PJIAE and PJIAH is restricted by the 2012 bond indenture, De Weever told MPs. “PJIAH does not own any major assets other than office equipment and office furniture. Further, PJIAH does not own, but has long lease rights to 553,311 square metres of land leased to it by the government of St. Maarten. Said leased property is sub-leased to PJIAE to carry out its duties as an airport operator,” she said.