& 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.
McKeeva Bush made the announcement Wednesday, saying Cohen & Company could
not deliver the cost savings it promised.
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.
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
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.
has therefore made the prudent decision, effective 27 January 2011,
to terminate its previously-announced award.”
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
is not known what, if any, portion of the US$185 million of borrowing has already been
secured through Cohen & Company.
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
still have to do some borrowing, but it will be less,” he