Debt refinance being considered
The Cayman Turtle Farm anticipates it will lose another $9.5 million over the course of government’s next financial year, with most of that spending going toward paying off accumulated debts.
According to the farm’s chief financial officer, who spoke in Legislative Assembly’s Finance Committee last week, about $5.9 million of the “equity injection” provided by government will go toward paying off debt principal and interest. Another $3.36 million will go to pay off operational costs that the farm doesn’t earn enough money to cover.
Turtle Farm Managing Director Tim Adam told the committee that total debt held by the tourism facility was about $22.5 million. He has said he expects all of the farm’s debts to be paid off by 2019.
“It’s been coming down progressively each year, a little over $4 million a year the principle amount of debt is being reduced,” Mr. Adam said.
East End MLA Arden McLean asked whether the government was considering refinancing some of the Turtle Farm’s debt to help lower interest costs.
Deputy Premier Moses Kirkconnell said the government was looking into “packaging” the Turtle Farm debt with some of government’s other debts that must be refinanced in the 2014/15 budget year. According to Finance Minister Marco Archer, five loans taken out by the Cayman Islands Development Bank must be paid between 2015 and 2016, with three of them coming due within the 2014/15 fiscal year, which begins on July 1.
The loans, referred to as “bullet” or “balloon payment” loans, must be paid off all at once, according to the conditions of the bond.
Mr. Archer said the three loans due in the upcoming year have a combined value of $26.4 million, with a $16.6 million loan “maturing” or coming due on April 27, 2015, a $4.8 million loan amount due on June 30, 2015, and a $5 million loan also due on June 30, 2015. The $5 million loan payment will be made through reserve funds held by the development bank, the finance minister said.
The other two loans owed are worth a total of $8.3 million and will be due sometime during the 2015/16 budget year. Government owes a total of $34.7 million on the five development bank loans
The Cayman Islands does not plan to borrow any new long-term debt in either its 2014/15 or 2015/16 budget years, Mr. Archer said. In addition, a short-term debt facility called “overdraft” borrowing will not be used in the upcoming budget, the finance minister said.
It is assumed that the United Kingdom would not object to Cayman refinancing portions of its debt, although U.K. officials would have to sign off on any such plan.
The Cayman Islands Development Bank loans are small in comparison to another “bullet loan” facility Cayman will have to either pay off or refinance within the decade. A US$312 bond issued by government in 2009 will mature in November 2019.