The Ministry of Finance announced today that on October 7th it successfully completed the purchase of the Caroline Bay project loans that were subject to Government of Bermuda guarantees.
On September 13, 2019, Minister of Finance Curtis Dickinson tabled an amendment to the Government Loans Act 1978 to increase the debt ceiling by $250 million to $2.75 billion and the Ministry subsequently closed on a $200 million credit facility issued jointly by Butterfield Bank and HSBC Bank of Bermuda. In turn, purchases of the Tranche B and C loans were completed for total consideration of approximately $170 million. As a result of the Tranche C purchases, local reinsurers Arch Capital Group Ltd (“Arch”) and AXIS Capital Holdings Limited (“AXIS”) have no remaining interests in the project.
Upon completion, Minister Dickinson said: “While the investments by Arch and AXIS were guaranteed by the Government, their support for the project and Bermuda in general goes back far earlier. With respect to these project loans, until recently they had not received a single interest or principal payment. I would like to personally thank them for their patience and continued commitment to Bermuda.”
Preston Hutchings, CIO of Arch Capital Group said: “Caroline Bay was, and still can be, an important project to stimulate employment and tourism growth in Bermuda. We were delighted to support it, but unfortunately the developers experienced financial difficulties that, to date have prevented completion of their vision.”
“Until demands on the guarantees became necessary, we continued to support and work with the Minister of Finance and the developers to achieve a different result. Unfortunately, that did not work out, but I would like to thank the Minister for keeping us duly informed throughout theprocess. I wish all parties success in seeing the project through to a better result, and we will continue to be committed to Bermuda.”
“The current status of this project is unfortunate, but we are grateful for the responsiveness of the Minister and the government in working towards a conclusion to this difficult situation," said Albert Benchimol, President and CEO of AXIS Capital. "We made this investment to support Bermuda’s economic growth and we remain committed to the island and its economy.”
Minister Dickinson added: “I would also like to thank the local banks and their teams who supported the Government by providing favourable terms and timely execution of the credit facility to help meet our short-term obligations.”