According to the proposal presented by government the holding envisages entering into a bond issue for a maximum principal amount of USD 20 million plus interest and expenses, for which issue Scotiatrust and Merchant Bank Trinidad and Tobago limited will act as arranger (the "Bond Issues")
Buncamper stated that no public debate preceded the voting on the subject and as such neither the Island council nor the people of St. Maarten were informed about this proposal by the Government. In addition many important questions remain unanswered. For this reason the DP has submitted a letter to the Executive Council requesting answers to 14 questions on the telecom subject.
The proposal states that any one bondholder can hold the company in default if at any time the principal and or interest of the bond cannot be paid. Simply put: it takes only one bond holder for the company to be held in default.
- What is the status of the management at the company? Under normal circumstances management would have to be well established and have the confidence of the shareholder before such a tremendous risk is taken. Can we conclude that the Shareholder has full confidence in management?
- Is the underwriter assuming responsibility of the bond? If so please indicate how.Going to the third mortgage position indicates a concern. So what is apparent is that there is no intension to consolidate.
Council lady Maria Buncamper –Molanus continues: "As an example let's consider that another telecom company buys the bonds. If then this one bond holder calls default because of a payment not being made of the principal and or interest, it would mean that the entire bond and the company have a problem. A provide more clarity on this issue we have requested the T.O.R. of the bond arranger. - Please provide the T.O.R. of the bond arranger.
- How will this bond affect the overall value of the company?
- Floating this bond will create additional debt as there is of course existing debt. Please provide the debt ratio at this moment and indicate how it will be affected after the bond is issued. Have the relevant discussions taken place and has the required permission been granted by the other debtors to accommodate the floating of the USD 20 million bond?
- We would like to ensure that the company remains solvent. Increasing the debt does not necessarily increase the solvency of the company. This then affects the job security as well. It is important to get an impression on whether or not this bond will have effects on the job security of those employed by the STHC NV and the subsidiaries.
- Resolution: What is the interest and what are the expenses associated with floating the bond of USD 20 million?
- Consideration b (i) of the resolution: It is stated that cross guarantees are part of this arrangement. In other words – the same assets are being used to guarantee more than one debt. What is the value of the pledged security and what is the value of the companies that have pledges their assets? This is important to know, because all companies are being encumbered.
- 1 b (ii) an (iii): What is the value of the equipment, the buildings and the real estate.
- What is the amount of the outstanding debt?
- Can we be provided with the existing debt structure?
- What are the terms? We know that the principal of maximum USD 20 million is established, but is this a short, mid or long-term bond.
- Can we please be provided with the underwriting agreement? The government refers to the "arranger". We need to know what that agreement entails.
- The proposal mentions the third mortgage. We can conclude that the most recently constructed buildings will be mortgaged. The fact that we are talking about a 3rd tight of mortgage is reason for concern and so we would like to be provided with a list of all assets held by the banks, other financial institutions at this moment.
"While clearly this matter has been approved by the Island Council, but for the sake of informing the members of the Island Council and the people of St. Maarten we look forward to the government's response": concludes DP Council member Maria Buncamper-Molanus.
