REGIONAL NEWS
Citibank Boosts Caribbean Investment: The Central America and Caribbean Investment Facility, a partnership between the Overseas Private Investment Corporation (OPIC) and Citibank, has set up a $200 million loan facility designed to bring jobs and investment to a region still recovering from the devastation of both Hurricanes Mitch and George.
“It will allow Citibank to make loans of 10 years to the region,” said Scot Fischer, head of the bank’s northern region in Latin America.
The Citibank loans, ranging from $500,000 to $40 million, will be used for power and infrastructure projects and will be half guaranteed by OPIC. As the facility’s underwriter, Citibank will determine whether OPIC will provide political risk insurance for the unguaranteed portion of the loans, which will range from one to 10 years in maturity.
CDC Launches Caribbean Fund:
In mid-March, the Commonwealth Development Corporation (CDC) launched the Tiona Fund, a closed-end private equity fund that will accept long-term equity and quasi-equity investments, ranging between $250,000 and $2.5 million, in the English speaking Caribbean.
The fund will receive about 12% of its equity from The Republic Bank Ltd., CIBC Caribbean Ltd. and Barclays Bank PLC, while other shareholders include the Multilateral Investment Fund, the Caribbean Development Bank, the European Investment Bank and the CDC.
Hal Jackman, a director at the Bank of Nova Scotia, will act as chairman of the fund, while David Bishop will be general manager.
In mid-March, the CDC also paid $13 million for Belize’s largest citrus grove, Barton Creek Farms Limited. It plans to merge the company with holdings it already has in Belize’s citrus sector, the country’s second biggest source of foreign exchange and an industry in which the CDC plans to invest another $40 million.
COUNTRY NEWS
The Bahamas Prepares for New Exchange:
If all goes according to plan, by November the Bahamas will have joined a growing list of Caribbean countries that have set up their own stock exchanges. Moreover, officials there plan to install the EFA software that is used throughout the Caribbean for trading and settlement, bringing the region one step closer to its goal of harmonizing all its securities markets.
The new exchange will help “round out” a broad range of financial services that the Bahamas already offers, says Barry J. Malcolm, executive director of the Bahamas Financial Service Board. “The idea is to provide a more efficient and less costly source of capital.”
Malcolm also emphasized the Bahamian exchange’s strengths in international capital raising as opposed to the more domestic focus of other Caribbean securities markets.
According to Larry Gibson, chairman of the steering committee for the project, the exchange will include listings of both domestic and international securities.
“The main opportunity is the international side where the exchange will attract listings of GDRs (global depositary receipts), structured products and investment funds,” said Gibson.
An Electronic Exchange:
The Trinidad&Tobago Stock Exchange is also soon expected to launch its electronic central depository system as part of a $2.1 million effort by the Inter-American Development Bank to automate and link the Caribbean’s stock exchanges.
Countries participating include the Bahamas, Barbados, Jamaica, Dominican Republic and Trinidad&Tobago. NASDAQ is providing the blueprint, while EFA of Canada will supply the software.
“We are pleased to provide our services to the Caribbean,” said Geoff Thompson, CEO of EFA Software. “By using common technology, the Caribbean will enable their marketplace to have greater exposure and liquidity.”
Almond Hotels Head for Jamaica:
In early February, the Almond Hotel Group of Barbados acquired a 25% stake in a 225-room resort hotel that will be built in Negril, Jamaica by Seasplash Plantation Ltd.
Construction on the $38 million hotel, which will employ 500 people, is expected to begin in June and end by December 2000.
Almond operates two properties in Barbados with a total of 500 rooms and 900 employees.
The CDC Snaps Up Trident Insurance:
In March, a group of investors from Barbados, in association with the Commonwealth Development Corporation (CDC) acquired a 70% stake in Trident Insurance Company Limited, which was held by Barbados Mutual Life Assurance. Trident has been offering property, motor and marine insurance on the island for the past 25 years.
A National Airline for Belize:
As part of its plans to boost the tourism sector through greater airline access, Belize’s government is trying to set up a national airline through a venture with a European carrier.
Belize does not have a local airline with international routes, and the only airlines that serve the country are American Airlines, Continental Airlines and Central America’s TACA.
Ogden to Improve Airports in DR:
A consortium led by Ogden Corporation (Ogden), a global company that focuses on the aviation, energy and entertainment businesses, has won the bid to manage four international airports in the Dominican Republic.
The consortium-which also includes Vancouver Airport Services of Canada, Italian construction company Impregilo and local investors Operadora de Aeropuertos del Caribe SA (OPASA)-will funnel $400 million to re-design and upgrade the airports, $200 million of which will be invested in the first two years. It will also establish a local company to collect fees and revenues generated by the airports over the next 20 years.
The privatized airports include Las Americas in Santo Domingo, Gregorio Luperon in Puerto Plata, Arroyo Barril in Samana and Maria Montez in Barahona. The contract represents Ogden’s third privatization in Latin America.
Tricom Expands Wireless System:
Tricom of the Dominican Republic is going full steam ahead in its efforts to expand its presence in the country’s telecom market.
By July, the company says its wireless telephone infrastructure will be deployed in the cities of Santo Domingo and Santiago.
Tricom says it hopes to provide cheaper telecommunications to a population underserved by the country’s more expensive fixed-line services.
Company officials note that their customer base will grow to 40,000 by the end of the year, up from 3,000 today, and that their goal is to have 150,000 Dominicans hooked up to their wireless system over the next three years.
A New Name and Owner for Guyana Airways:
In late February, Aviation Investments Inc., a consortium made up of a group of Guyanese investors, bought 51% of Guyana Airways Corporation (GAC) for $1.8 million. The government will keep 39% of the airline, which will be renamed Guyana Airways 2000 Inc (GA 2000 Inc), while another 10% will be given to 184 employees.
The winning consortium is made up of Trans Guyana Airways, Kayman Sankar Aviation, Air Services Ltd., Mekdeci Aviation, Demerara Distilleries Ltd., Gafoor&Sons Ltd., Vinelli Industries Ltd., Mings Products and Services Ltd as well as two overseas-based Guyanese investors.
Foreign Investors Eye Haiti:
Asian and European investors seem to be showing an increasing interest in Haiti. Take, for instance, Profabril Internacional of Portugal, which was recently awarded a contract to create a viability plan to reform the country’s water supply, including the southeastern city of Jacmel.
The Taiwanese government also announced in mid-January that it would offer an $8 million loan to Haiti to finance part of a $20 million expressway project that will link the international airport to Port-au-Prince. The bidding for the project will be limited to Taiwanese civil engineering firms.
Jamaica Taps into Euro Market:
Jamaica took advantage of the deeper debt markets created by Europe’s recent monetary union when in mid-March the Agricultural Credit Bank of Jamaica (ACBJ) issued a five-year, floating rate note worth 65 million euros whose proceeds will improve and maintain the island’s sugar plantations.
“This is a historic issue, the first Caribbean euro issue,” said Kingsley Thomas, managing director at the Agricultural Credit Bank of Jamaica. He added that the ACBJ would not be exposed to any currency risk because Jamaica gets paid in euros for its sugar exports.
The mandate to arrange the deal was switched from Spain’s Santander to KBC Bank Global Trade Finance Bank (part of Kredietbank of Belgium) following the Spanish bank’s merger with Banco Central Hispano.
In other financial news, Jamaica looks likely to finalize a loan agreement with the Inter-American Development Bank to finance its National Solid Waste Management Program. The project is expected to cost around $20 million over five years and will develop an institutional framework for the management of solid waste.
Tough Times in Suriname:
Times aren’t easy for the government of Suriname, which this year has had to face a tax rebellion, a currency devaluation and the withdrawal of a major international investor.
The latest blow came when Alcoa, the world’s largest aluminium producer, said it would shut down a smelter plant in Suriname, closing indefinitely the 30,000-metric-ton-per-year smelter run by its Surinamese unit Suralco.
Suralco represents about 65% of Suriname’s export earnings and employs more than 300 people. The company says the closure is due to high costs and power problems caused by low rainfall.
In early January, Suriname’s central bank floated its currency after a tax revolt by the country’s two largest companies. The bank had maintained an official cap of SFl 396 to the US dollar, but the rate is now expected to be about SFl 700.
Trinidad Cements Deal in Jamaica:
In late March, Trinidad Cement Ltd. (TCL) paid the Jamaican government $29.4 million for a 43.5% share in the Caribbean Cement Company (CCC).
According to industry observers, TCL, which prior to the acquisition owned 10% of the Jamaican company, will now have a 50% stake in CCC after it divests 3.5% of its shares, possibly to a Trinidadian investor such as Royal Bank.
Barbados Tackles Debt:
In efforts to tackle its debt burden, the government of Barbados says it plans to borrow up to $75 million from Citibank of Trinidad&Tobago so that it can make a $30 million bond payment due in December. The loan will also be used to bolster the country’s tourism and agriculture sectors, say observers.