Jul 2004 Financial News

RBTT In Airport Expansion Project

Jul 26, 2004

Positive interest in the Princess Juliana International Airport Phase II expansion project has been expressed by the majority of investors attending the "road show" organised by RBTT Merchant Bank and the Princess Juliana International Airport Operating Company.

Airport President Eugene Holiday said after the close of Tuesday's session that there was quite some interest in the project and he was confident that this interest would be translated into purchase of the bonds currently held by RBTT Merchant Bank.

Twenty-two representatives of 15 North American, Caribbean and European companies attended the presentation at Sonesta Maho Beach Resort and Casino. Amongst the potential investors were insurance banks, mutual funds and other commercial banks. The investors were invited to St. Maarten by the bank and airport.

The next step in the process is for interested parties to contact the bond purchase arranger (the bank) to complete purchase, RBTT Merchant Bank Regional Manager Gregory Hill told The Daily Herald.

He also remarked that the investors are extremely positive about the project and its potential. "Due to the structure of the bonds, I'm sure we will have over- subscription of the bonds."

At the opening session of the road show Tuesday morning, Aviation Affairs Commissioner Sarah Wescott-Williams, Tourism Commissioner Theo Heyliger, Central Bank President Emsley Tromp, Holiday and Hill briefed the group on the project, which includes a new terminal building and additional aircraft and parking facilities.

Tromp told the gathering the expansion of the airport was a welcome impetus to the strengthening of the St. Maarten economy and that of the Netherlands Antilles.

"This project, along with some large investment projects in Curaçao such as the expansion of the airport there, the construction of a utility plant and the expansion of the economic zone, suggests an encouraging outlook for further economic growth," he added.

The inflation rate in the Antilles increased from 0.4 per cent in 2002 to 1.9 per cent in 2003, due mainly to a rise in world oil prices, the appreciation of the euro and higher inflation rates of our main trading partners, the United States and Venezuela, Tromp said. "St. Maarten's inflation accelerated to a lesser extent from 0.5 per cent to 1.5 per cent during this period."

The economic growth was primarily attributed to tourism and transportation. "The importance of St. Maarten for the tourist sector in the Netherlands Antilles is well established: the island generated 60 per cent of stay-over tourism, 75 per cent of cruise tourism and 63 per cent of tourism-related foreign exchange earnings in 2003," he stated.

St. Maarten's economy performed better than the Antillean average and continued growth is expected by the Central Bank for 2004. "Given the dominance of tourism in the island's economy, buoyant growth in the tourist sector will translate into buoyant growth of the entire economy, supported further by the start of the airport expansion project."

Holiday called the airport the heartbeat of St. Maarten and a lifeline for the surrounding islands. He added that any increase or decrease in air traffic at the airport was "an indicator of the health of the economy" and the airport was "a major economic force" and source of economic wealth for the island.

Wescott-Williams stated that for the island to stay competitive and maintain its position as the second busiest airport in the region after Puerto Rico, investments were needed. She told the investors the expansion project could be considered a regional one, as the airport serves as a hub in this area of the Caribbean.

The other investments being made on the island to complement the expansion projects, such as increasing the number of hotel rooms to accommodate the anticipated growth in air arrivals, were outlined by Heyliger.

Listed projects included AquaMarina, The Village, Tropics, The Cliff and the addition of Sonesta Maho Beach Resort and Casino.

The US$ 87 million expansion project, slated for completion by 2006, features the construction of a new airport terminal, the re-routing of a new road around this facility and additional aircraft and vehicle parking capacity. It also includes the airport's integrated Air Traffic Control and Radar Facility, which was completed in March 2004.

The 27,000-square-meter new Airport Terminal will nearly double the size and passenger capacity of the current facility. It will be able to accommodate 2.5 million passengers per year, one million more than it can currently accommodate.

Some 54,000 square meters of land has been reclaimed from Simpson Bay Lagoon for its construction.