Pago Pago, AMERICAN SAMOA — In her power-point presentation at last Thursday’s official launching of the $29 million American Samoa branching unit of Hawaiki cable, ASTCA acting chief executive officer, Falaovaoto Sualevai said that the the ASG Employees' Retirement Fund (ASGERF) had invested in the multi-million-dollar project. She did not expand on this statement.

Several Samoa News readers have said they thought the ASGERF money to the American Samoa Tele Communications Authority (ASTCA) was in the form of loans, not an investment. They asked: Is the money ASTCA received from the ASG Employees' Retirement Fund a loan or an investment?

Samoa News response:

Note 7 — Long-Term Debt — to financial statements of the ASTCA Financial Statement report — Years Ended Sept. 20, 2017 and 2016 — points to money received from the ASGERF was in the form of loans — but that the American Samoa Government was in negotiation to convert one of the loans from debt to equity.

The Note says that ASTCA was not in compliance with the long -term agreement with the Rural Utilities Service (RUS), which “requires the maintenance of certain financial ratios and contains restrictions as of Sept. 30, 2017. ASTCA was not in compliance with defined ratios and other contractual restriction as of September 30, 2017.”

It adds that “with respect to the year-ended September 30, 2016, ASTCA received communication from RUS stating that RUS reviewed ASTCA’s five-year pro forma projections and does not intend to take action regarding noncompliance for TIER requirement for the calendar year 2016.”

It then explains that “effective September 29, 2017, the ASGERF loan was amended to reflect a principal amount not to exceed $9,678,975, payable in equal monthly installments of $117,340 commencing on November 1, 2017, due October 1, 2027, collateralized by real and personal property.”

The Note adds “subsequent to year-end, ASTCA received loan proceeds of $6,000,000 related to the amended loan agreement.” According to Note 7, “this additional loan is expected to be a short-term bridge financing agreement associated with the Hawaii cable project, which is in negotiation with ASGERF and the American Samoa Government, to be converted to an equity investment in ASTCA.”

It concludes that “as of the date of the financial statements, negotiations are still in progress with ASG regarding the conversion of debt to equity.”

With ASTCA acting chief executive officer saying that ASGERF has invested in ASTCA’s Hawaii cable project, i.e. the Hawaiki cable multi-million dollar project, it looks like the conversion of the $6Million from debt (loan) to equity (investment) has happened. There is also still a loan — the one not to exceed $9,678,975.

BACKGROUND

The United States Department of Agriculture’s RUS administers programs that provide much-needed infrastructure or infrastructure improvements to rural communities.

According to Note 8 - Broadband Grant and Loan — to ASTCA’s 2017 financial statements, in 2010, ASTCA was selected to receive funding for a broadband project by the USDA through the American Recovery and Reinvestment Act Broadband Initiatives Program (BIP). The broadband project was funded through an $81,034,763 grant and a $10,000,000 loan through the RUS.

All grant and loan funds were required to be expended by September 15, 2015 and the project was placed into service as of September 30, 2016. Total grant and loan amounts received by ASTCA were $75,618,349 and $9,331,454, respectively.

In April 2017 a loan from ASGERF to ASTCA for the undersea fiber optic cable Hawaiki cable project for $4Mil was approved. Then in Sept 2017, ASTCA submitted a second loan request, with the Executive Director of the Retirement Fund saying at the time that there are varying loan amounts for various stages of projects that ASTCA is planning, relating to undersea fiber optic infrastructure. There was no specific amount noted at that time.