Government terminates deal with financier

Cohen
& Company Capital Markets LLC, the company that was controversially engaged
in October 2010 to secure US$185 million of long-term financing for the Cayman
Islands Government, has had its contract terminated.

Premier
McKeeva Bush made the announcement Wednesday, saying Cohen & Company could
not deliver the cost savings it promised.

“On
the basis of representations made to Government, the acceptance of the offer
from Cohen & Company was calculated to have been approximately US$24 million
less than the offer recommended to Government via the Central Tenders Committee
process,” he said. “Sensibly, and with the country’s benefit in mind, Government
chose the lower cost offer, to try and save $24 million.

“Key
amongst the representations made to Government was that a 4.5 per cent interest
rate cap could be obtained, at a certain price, so that the rate of interest
that Government would pay on its current year borrowing would never exceed
4.5%.

“Government
has now been advised that the 4.5 per cent interest rate cap cannot be obtained
at the price previously represented to Government. The increase in the price of
the interest rate cap is of such magnitude that it would wipe-out the
cost-minimisation advantage that had been agreed.

“Government
has therefore made the prudent decision, effective 27 January 2011,
to terminate its previously-announced award.”

Mr.
Bush and the government took criticism for overriding a Central Tenders
Committee decision with the selection of Cohen & Company.  In addition to
the interest cost savings as a reason for choosing Cohen & Company, Mr. Bush
said Wednesday the company “was the only bidder that categorically stated it
would be willing to secure financing for Cayman Airways.  None of the other
bidders were so positive and supportive of our national
airline.”

It
is not known what, if any, portion of the US$185 million of borrowing has already been
secured through Cohen & Company.

However,
Mr. Bush said because of better-than-expected financial performance of
government, which should lead to a budget surplus, an assessment would be done
to see if the government really needed to borrow the entire amount it had
requested.

“We’ll
still have to do some borrowing, but it will be less,” he
said.

4 COMMENTS

  1. TODAY is the day to set up the 10000 program to sell a quasi status (you dont get to vote for 10 years )programme.( you also pay a fee to work lets say 3000)a year. Set up a kisok at the cruise ship terminal and get those people to buy in and tell there friends. Everyday people will buy in. Especially if you allow financing. People will put 2000 down without thinking too much .. the math and economics that go along with it is a win for the island and the cruise ship customers are the customers we want..DO It Today..Furthermore good people allready living on island will jump at the chance..

  2. Great Idea, I would be the first on line with 10K in hand. And Id retire from my day job and be shopping for a Primary Home in Cayman the next day. I do agree that plenty of folks will do the same. The Cruise ship kiosk thing with 2k down would generate a lot of revenue although there would probably be a lot of folks that put the money down on impulse and not follow through so make a waiting list since the numbers will be limited, make sure the contract says non refundable insure they would have to make regular payments or default and they would not get a status Cert until paid in full. As for working I do think it should be Caymanians first, Status Holders second and Expats last. I would however like to have the right to vote earlier than 10 Years. Maybe more like 5 years and proof of primary home ownership I could live with IE not someone who buys status but actually lives in another country.

    It would be nice if this recommendation could actually go to the premier to consider.

  3. This was a smart move by the Premier. I dont think we need to get ourselves in big loans. It is better we save and take it easy with mounting expenses.

  4. Mr. Editor

    I cannot believe the commentary that people are actually suggesting as ways to get this country out of its financial hole it has built for itself.Good old fashioned money management is not that difficult. Live, build, and spend according to what you can afford. The rest takes care of itself. As an example, look at the structure that Cayman Prep has erected and did so in a very short time. I have not actually been inside but I have friends who teach there and they says its state of the art and as modern as any educational system would ever need. Why did we have to try and duplicate the Taj Mahal when we stared building our schools years ago. I must say though, the ivy growing up around the structure at John Gray is beautiful.

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