ST JOHN’S, Antigua & Barbuda, Wednesday October 30, 2019 – Parliament has given the Gaston Browne-led administration the green light to secure a US$15.8 million loan to buy additional shares in the Antigua-based regional carrier LIAT.
But the Prime Minister has served notice that the financing will come with cuts, including pay reductions.
A resolution allowing the government to obtain a loan from Banco del ALBA was passed yesterday in the House of Assembly. Browne, who is also Finance Minister, said he negotiated the 10-year loan on September 11.
“This loan will be termed out over a period of 10 years, at six per cent per annum, with an annual repayment of about EC $6 million — about US $2.2 million a year,” he said.
“A condition of this new capital would be that there has to be cuts including a reduction in salary and wages. I’m pretty sure that there’ll be some changes even with the directorship of LIAT. We have to make sure that we have a cadre of competent people and we may even create the space for members in the private sector as well to participate.”
“So, the programme calls for recapitalisation with a simultaneous restructuring of LIAT. So, we’ll be focusing on reducing expenses while at the same time increasing revenue,” Browne added.
Of the US$15.8 million loan amount, US$15 million will be utilized to recapitalize LIAT while the other US$800,000 will be utilized to cover “the transactional expenses at a percentage of two per cent, as well as a 1 per cent FFE contribution”, which is a contribution to the bank’s equity.
In addition, the Antigua and Barbuda government will be required to contribute to a social fund.
Earlier this year, Antigua and Barbuda was in negotiations with the Barbados government, the largest single shareholder of the financially-troubled airline, on purchasing the majority of its 49.4 per cent shares.
But earlier this month, Browne said he had told his Barbadian counterpart, Mia Mottley that his government no longer wanted to buy the shares and would instead invest in the carrier.