Settlement of $5m emergency loan no longer part of the $15m bridge loan
Airport SXM no longer has to repay the US$5 million emergency loan it received from the Government of St. Maarten in January to pay employee salaries and will breathe a sigh of relief now that Finance Minister Perry Geerlings has signed the agreement for it to receive an additional US$15 million bridge loan.
Geerlings who signed the documents Thursday last week said on Monday the Government of The Netherlands and St. Maarten have also reached an agreement for the Dutch Government to repay the US$5 million emergency loan to St. Maarten. Originally, Airport SXM was expected to repay the US$5 million once it received the bridge loan. The government of St. Maarten was to deduct the emergency loan from the bridge loan as part of the original lending conditions.
The first tranche of the bridge loan is expected to be transferred by the Ministry of Finance to PJIA’s account this week. Geerlings said the Airport's bondholders are also being kept informed. The US$5 million vital liquidity support PJIA received in the form of a zero interest-bearing loan from the Government of St. Maarten was to ensure that the cash strapped organisation was able to meet its obligations at the end of January this year that includes paying 270 workers. However, a financial recovery review of PJIA shows that the airport is in a financially precarious situation post-hurricane Irma, and after negotiations with St. Maarten and the Dutch Government, an agreement was reached for the Dutch Government to repay the US$5 million emergency loan.
This money according to Geerlings will be repaid to St. Maarten when it receives the next tranche of its own liquidity support pledged by The Netherlands to aid in the servicing the island’s financial/operational obligations.
The US$15 bridge loan will be given to the airport in tranches of US$5 million. One condition of this support is that PJIA produces a monthly report for the government on its use of the funds received which according to Minister Geerlings are not intended for the reconstruction of the Airport’s terminal building.
He said, "The idea is for the money to be used for paying salaries and servicing other operational expenses, but it is not to be used for reconstruction."
The money will give Airport SXM some breathing room while the Term Sheet for the US$100 million financing for reconstruction of the Terminal Building is being finalised. That financing is being made available from the Dutch Government financed Trust fund administered by the World Bank and the European Investment Bank EIB for a combined US$50 million each. The money from the Trust Fund will be given to the government of St. Maarten as a grant while the EIB funds will be in the form of a loan, which the government of St. Maarten will on lend to PJIA.