ASG bond to settle old debts will soon be ready says ASEDA
ASG’s long-term debt of $6 million — a court settlement from the old Laufou Shopping Center fire — is a priority for the Lolo Administration on projects to be liquidated by floating a bond, and the bond is being worked on by the American Samoa Economic Development Authority (ASEDA).
Gov. Lolo Matalasi Moliga reconstituted last year the ASEDA, saying he is looking at floating a bond as a revenue stream for major local projects that cannot be funded through ordinary government income sources.
In his address to the Fono two weeks ago, the governor said ASEDA is in the “process of floating a bond to generate funds to liquidate our outstanding debts, repair our roads and other infrastructure projects designed to improve our economic development climate to attract foreign investment.”
Additionally, a Financial Advisor has been selected and the process of identifying projects will soon begin.
Asked to comment on some of the projects recommended by ASEDA to be liquidated pertaining to outstanding debts, ASEDA board chairman, Dr. Falema’o ‘Phil’ M. Pili — who is also the ASG Treasurer — told Samoa News, “Foremost is our long-term debt, settling the Laufou insurance settlement” with Progressive Insurance Company “ because it is accruing huge interest daily.”
(The current total in the settlement stands at $6 million plus interest, but ASG has another appeal pending in court on this case. Progressive Insurance Company was the insurer of the old Laufou building destroyed by a fire in 2002.)
Pili also said the next long term liability is to the American Samoa Power Authority; then the two separate loans to the ASG Employees Retirement Fund “with high interest rates of 7.5% and 8%”; and also the tobacco settlement loan with the U.S. Interior Department with an interest rate of 6.85% and a “balloon payment due in 2017”.
While ASG made timely payments to cover last year’s utility rates, the governor told lawmakers there is still $9 million in arrears owed to ASPA. Lolo also said ASG currently owes $11.87 million on the $20 million loan and $7.11 million on the $10 million loan from the Retirement Fund.
Additionally $11.31 million is owed in the “DOI Tobacco Loan” (which is the $18.6 million loan ASG received several year ago from the federal government in exchange for American Samoa’s share of the Master Tobacco Settlement Agreement, worked out by attorney generals of states and territories and major U.S. tobacco companies. DOI oversees this loan, including its repayment.)
Asked what road repair projects ASEDA plans to recommend to be funded with the proposed floating bond, the ASG Treasurer said the “governor wishes to fix all roads including all access roads throughout the Territory and other infrastructure projects.”
Pili identified the firm that won the bid for Financial Advisor as Lewis Young Birmingham Robertson, and said the contract has been awarded. (A Goggle search of the firm, shows it’s headquartered in Salt Lake City, Utah and its website says the firm is an independent “financial advisor” that can successfully and efficiently assess the capital markets seeking to provide the most cost-effective financing possible.)
“We are currently working with them to prep them of the requirements necessary to effect a reasonable bond rate. The next step is to determine who will underwrite the bonds,” Pili explained. “We are hoping to get all of this rolling by the end of February, with the actual issuance of the bond by April, 2014.”
According to the governor, ASEDA will be the standing government agency with bonding capacity and membership expertise that can guide the government along the path towards a greater ability to do long range financial planning, and to take advantage of changes in the financial services industry that can benefit the territory from time to time.