Group offers billion dollar Dorian loan

The almost $1 billion that U.S.-based The P3 Group, Inc. pledged to make available to the  government on Monday would be a loan, financed by the group and repaid with interest.

The P3 Group Chief Executive Officer Dee Brown confirmed this in an interview with The Nassau Guardian yesterday.

The group made the pledge during a conference government held to raise funds for Hurricane Dorian relief, which was sponsored by the United Nations Development Programme (UNDP).

Disaster Recovery Authority Managing Director Katherine Forbes-Smith said yesterday that The P3 Group made it clear that it was a loan from the start.

However, she said no decision has yet been made as to whether any portion of the loan offer would be accepted.

“…Just because somebody pledges something to you, does not necessarily mean that you would access that particular pledge immediately in the short-term or long-term,” Forbes-Smith told The Guardian.

She added, “When they stood up and made their presentation, they said that they would be offering $975 million in this kind of loan structure and that’s a pledge. So, if the authority was interested in looking at some kind of loan, this is something that has been brought forward.”

She added, “First of all, somebody stands up at a conference and says, ‘This money has been made available to you if you want to access it,’ but obviously when someone says ‘if you want to access it’ it means there are a lot of terms and conditions surrounding that.”

Brown said that the up-front cost to pre-develop a $975 million project would be about $90; an amount, he said, P3 would cover.

“So, what we’re saying is we’re going to absorb all the front-end costs on whatever project the government identified that they want us to pursue,” he said.

“We’ll cover the front-end cost, we’ll design it, we’ll finance it, we’ll construct it and that relieves the burden off the government.

“Otherwise, they would have to appropriate or borrow or find the funds to do all of that.”

When Prime Minister Dr. Hubert Minnis announced the conference last month, he said his administration was “hopeful that the pledging conference will attract donations” to help the country recover from Dorian.

The prime minister said government was “quite urgently” seeking to raise funds “to complement the government’s $10 million already given for home repairs”.

As Brown outlined that the $975 million was allocated to several different categories, he added, “What we do, we look at projects that can actually pay for themselves. So, what would happen is the government would basically pledge the revenue from the project to repay the debt.

“And what we would do is really give concessional interest rates, so our rates would be lower than what you typically would see in the market.

“And also we don’t require the government to pledge a credit behind our obligation, therefore it doesn’t count against the national debt. You’re getting the project delivered without running up the national debt at the same time.

“It’s a benefit for the government, no doubt about it.”

Brown said that details such as what the interest rate would be and how much time government would have to repay have yet to be negotiated.

“That’s negotiable, and we haven’t got into that level of discussions yet. But what I can tell you is typical is that the government can elect to go as long as 30 years on repayment. So, it’s really from a budgetary standpoint what they’re comfortable with,” Brown said.

He added, “We haven’t fully underwritten the interest rates but I could just tell you in the United States, it would be in the, you know, upper threes, low fours percent range, and we would do everything we could to be as competitive. Obviously there are some different underwriting factors outside of the U.S. but this is what we would anticipate having as a rate-honored deal like this within the United States.

“But it would be competitive, and I’m sure it’s going to be below the market than what they’ve seen previously.”

Forbes-Smith said not all the pledges at the conference would have been in the form of cash.

“I think what we need to first of all understand, and I don’t think we’re accustomed to having these pledging-type conferences, but what we have to understand is when people pledge it’s not just cash; it’s also technical support, it’s a variety of things,” she said.

“I heard someone, a representative from Harvard University, talking about pledging some human resource-type technical support. So, it comes in many ways.

“But what is important, when I addressed the conference I said that on behalf of the authority one of the things that we have to be very cognizant about is full transparency.”

The majority of the $975 million pledge is allocated for healthcare, according to Brown, with a total of $675 million earmarked for that aspect.

He also said that the hope is that a “world-class” healthcare facility would be built that would “essentially help pay for the project itself”, and noted that the group would expect to have “ownership interest in the project in the interim” until the debt is repaid.

The other allocations were approximately $50 million for community engagement and technical components; $100 million for renewable energy and solar; and $155 million for “other essential government facilities” such as schools, housing and airports, according to Brown.

A total of $1.5 billion in cash and “technical assistance” pledges were received during the event.

Forbes-Smith said that by the end of this week a complete breakdown of all of the pledges received will be posted publicly “so people could see what this $1.5 billion looks like”.

“And really this is kind of a kick-off to really more fundraising activities that the authority has to engage in because we have been approached by a number of NGOs, private charities, high-net-worth-value individuals who want to pledge their support. And, so, we are now, in a very structured way, will go after and continue to talk to people about helping The Bahamas,” Forbes-Smith said.

She added, “Bahamian people need to be assured first of all what the pledges look like and come to understand that it’s not cash, it’s a lot of other things that we need help with moving forward with rebuilding this country.

“It’s no secret, and as long as I’m the managing director of this authority, information that should be forwarded to the public and media and the Bahamian people, that will be done. I can assure you of that.”

The P3 Group Inc. website says it is “a commercial real estate firm and boutique development and consulting firm that specializes in business and community development through the creation of public-private partnerships also known as P3’s; and commercial real estate brokerage and leasing, with corporate, federal, state, county and municipal  governments.

“Public-private partnerships between a government agency and private-sector company can be used to design, build, finance, operate and maintain projects such as public transportation networks, student housing, college dining halls, parks and convention centers. Financing a project through a public-private partnership can allow a project to be completed sooner or make it a possibility in the first place.”

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