PJIA chief executive officer (CEO) Brian Mingo.
AIRPORT–Securing a loan on the open market for the reconstruction of the Princess Juliana International Airport (PJIA), rather than accepting financial support from the World Bank, the European Investment Bank (EIB), and the Dutch government, is “a futile exercise that holds out little advantage and only serves to delay the start of much needed construction works,” said PJIA chief executive officer (CEO) Brian Mingo on Thursday.
According to Mingo, with the airport’s liquidity issues and negotiations having been completed at several levels, the time for talking is long past, and now is the time for the airport’s shareholders to take a decision.
“The airport faces a detrimental phase in which, if the present World Bank and EIB funding is not completed soon, and the funding is not available by December 1, 2019, the business will not be able to comply with its liabilities.
“This, in principle, all has to do with us all being on the same page to repair our airport. A project which would be valued at over US $100 million … is being delayed by different opinions and interest groups,” said Mingo in an invited comment on Thursday.
Mingo says the management team of PJIA has designed a complete recovery programme for the airport, adding that PJIA has opted for the soft funding option which includes funds from the World Bank and the EIB.
“Some seven years ago, in the financial year 2012, PJIAE [Princess Juliana International Airport Operating Company – Ed.] borrowed $143 million to execute a capital improvement programme and pay off a previous debt from 2005. This loan, also referred to as an indenture, tied the hands of management, since it limited any acquiring of additional debts,” he said.
According to Mingo, until Hurricane Irma destroyed a major part of the airport facility in September 2017, this limitation was not a major factor. However, it proved an stumbling block afterwards because the airport was prevented from obtaining new funding, he said, adding that the insurance claim with insurance company NAGICO was also at a deadlock.
Mingo said the airport then expended on its own reserves to get PJIA to its present state of operation and readiness.
“As a responsible corporate entity, we kept the existing airport business up and running and serving the aviation market. The tourist numbers have also recovered somewhat after two years and are now at 71 per cent of the 2016 numbers,” he said.
“As the shareholder of the airport, the government needs to acknowledge its consent for the loan and continuity of the airport business towards the lenders of the 2012 indenture. The lenders want to ensure that the airport will keep on paying its debt service, [and] its commitment towards the 2012 loan, which extends to 2027,” said the airport CEO.
Mingo said he spoke to caretaker Finance Minister Perry Geerlings and caretaker Tourism, Economic Affairs, Transport and Telecommunication (TEATT) Minister Stuart Johnson this week about signing the airport’s financing agreements.
A motion of no confidence against five ministers was passed by Parliament on September 26. The motion also instructed the caretaker Council of Ministers not to enter into any contracts with third parties, whether collectively or individually. The World Bank and the EIB are considered third parties.
However, Mingo said Governor Eugene Holiday’s instruction for continuity – by presenting a National Decree stating that the caretaker Ministers can continue with any existing projects and commitments – must also include the funding for the airport. Mingo is concerned about the motion of no confidence being interpreted as a restriction from signing any new initiatives or commitments, consequently putting the airport’s reconstruction in a bind.
“The paradox between the National Decree … and the motion of Parliament … is where the international concerns are. This was explained and defused by a constitutional expert on kingdom affairs from the Netherlands, who clearly explained the different layers and jurisdictions of both papers.
“One has to understand that, today, the airport’s progress, which relies on international funding, is being questioned by the legal teams of the [bond]holders; the political instability of St. Maarten’s government being the main cause of the uncertainty.
“The airport has budgeted the liquidity support and insurance proceeds as sources to fund the cash shortfall and storm preparations. The liquidity support was given by the Netherlands and St. Maarten, the insurance proceeds are not to be released until the certainty of the government is substantiated.
“The funding ($100 million) has conditions, [like] the agreed corporate governance steps … to ensure the right people are involved and the funds are put to good use,” said Mingo.
Regarding the urgency of the airport’s financing, Mingo empathically stated, “it must be done now – not next week or next month – because the airport is running out of time. We have a great opportunity, let us fix our airport, let us all work together on moving St. Maarten forward. Anything else is pointless.”
Source: The Daily Herald https://www.thedailyherald.sx/islands/92131-airport-reconstruction-now-fully-in-the-hands-of-its-shareholders-says-mingo-2
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