Retirement Fund wants part ownership in cable spur as collateral for 2nd ASTCA loan
Among the conditions of a second loan for the American Samoa TeleCommunications Authority is that the ASG Employees Retirement Fund has part ownership in the spur connecting American Samoa to the new Hawaiki Submarine Cable, to be launched mid-2018.
This is according to testimony by Retirement Fund officials during a Senate Retirement Committee hearing last Thursday where committee chairman Sen. Tuaolo Manaia Fruean, who is the Senate member on the Retirement Fund board of trustees, stated that ASTCA has applied for a $30 million loan from the federal government. At the Senate hearing, ASTCA chief executive officer Pulele’iite Tufele said the total cost of the project, which is expected to be in service next June, is $30 million. He explained that the Hawaiki cable runs from Portland, Oregon to New Zealand and Australia, with spurs connecting Hawai’i, American Samoa and New Caledonia to the cable.
As to why ASTCA opted to join Hawaiki, ASTCA’s recently appointed board chairman Sen. Fai’ivae Iuli Godinet explained that the current American Samoa Hawaii Cable (or ASH-Cable), has a limited “life span” — with about two years left. And the authority looked for another submarine cable for connectivity to further improve Internet connection.
Pulele’iite shared that the current board and administration continued on with Hawaiki, reaching a new agreement with 200 gigs, which costs around $50 to $60 million, but negotiations dropped it down based on ASTCA’s finances. With 200 gigs, he said American Samoa could also sell its capacity to neighboring countries.
Asked by the committee regarding the total cost, Pulele’iite said the project is $30 million — and there is currently a $10 million total loan proposal with the ASG Retirement Fund, while it is also seeking a loan from the federal government. The committee sought additional details on the ASTCA loan, to which Retirement Office executive director Iaulualo Talia, explained that the rst loan was for $4.2 mil- lion, with a current balance of $3 million, while the latest request is for $6 million.
Iaulualo said the two loans still fall within the 10.7% — which is the amount of local investment that can be made by the Retirement Fund.
Some senators pointed out that the Retirement Fund is an investment fund, “it’ s not a lending institute” and therefore should be protected for current and future retirees.
Sen. Magalei Logovi’i, a former Retirement Fund board of trustee member asked what collateral was used for the first loan, and Iaulualo said it’s the new ASTCA building in Tafuna. Magalei asked if the same building would be used as collateral for the second loan.
Iaulualo said the ASTCA building in Tafuna is included as part of collateral for both loans. According to Iaulualo, written submission states that the Tafuna building is valued at $7 million. He added that the board of trustees has already discussed this and it would need to “own part” of the Hawaiki spur once the loan is processed and ASTCA has already been told. Responding to the use of the word “loan” by some senators, Retirement Fund board of trustee chairman, Va’anatiu Iafeta Tofala said the board considers this an “investment” — not a loan.
He said the board of trustees stepped in to help ASTCA, which is a government entity in need of financial support. Va’anatiu said that besides the first loan and the new loan, which has been approved, ASTCA has no other loans with the Retirement Fund, which as of Sept. 30th is valued at $202 million. He said the board’ s acceptance of the investment comes with many conditions, and reiterated the need to help ASTCA achieve this great milestone in connectivity, which benefits America Samoa as a territory. Later during the hearing, Tuaolo revealed that ASTCA is submitting $30 mil- lion loan request to the federal government and the governor is expected to travel soon to Washington D.C. to testify in support. He said the Retirement Fund has recommended to ASTCA to clear these two loans — for the Hawaiki project — upon getting the federal loan money. It wasn’t made clear during the hearing when the Retirement loan was approved and if the proceeds have been transferred to ASTCA.
Samoa News will report on other ASTCA issues that were raised during the hearing, in future editions.