States of Jersey Development Company: Revolving Credit Facility Extension

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A decision made 31 August 2017:

Decision Reference: MD-TR-2017-0113
Decision Summary Title:	SOJDC – extension of revolving credit facility for IFC1		Date of Decision Summary:	25th August 2017
Decision Summary Author:	Director of Treasury Operations and Investments		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	SOJDC – extension of revolving credit facility for IFC1		Date of Written Report:	25th August 2017
Written Report Author:	Director of Treasury Operations and Investments		Written Report : Public or Exempt?	Exempt: FoI Article 33
Subject: Ministerial approval for the States of Jersey Development Company (“SOJDC”) to extend its Revolving Credit Facility (“RCF”) of £2.5 million with HSBC until 7th August 2020. This facility was originally granted to assist with the construction of the International Finance Centre 1 (“IFC1”) and will be repaid upon the sale of the building.
Decision(s): The Minister decided the following in accordance with Article 27 of the Company’s Articles of Association and in accordance with Section 13.1 of SOJDC’s Memorandum of Understanding (MoU) :- The Minister approved the Company’s request to extend its Revolving Credit Facility of £2.5 million until 7th August 2020 and requires the facility to be repaid from the sale proceeds of IFC1.
Reason(s) for decision: After careful consideration the Board of SoJDC has agreed that it would not be in the best interests of the Company to raise the required funds through a sale of IFC1 now (because of a reduced value as a result of unlet space) as it has the ability to borrow money, effectively as bridging finance, until IFC1 is sold. JDC therefore needs to extend the current RCF linked to the construction of IFC1 as they are not yet in a position to sell the building The Minister’s approval for SOJDC to enter into external financing and charge its property is in accordance with Article 27 of the Company’s Articles of Association which states: “Subject to prior written consent of the Minister, the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof….” and in accordance with the MoU Section 13.1 which includes the requirement for the consent of the Minister if SOJDC:- creates any material mortgage or security interest, other than any arising by operation of law or prior agreed limits over any of SoJDC’s assets; gives any material guarantee, indemnity or security in respect of obligations of any person other than in the ordinary course of trading; borrows any material sum or factor or discount any material book debts, except in respect of the leasing of plant or equipment in the ordinary course of trading and except as permitted under the terms of any working capital and capital expenditure facilities which may be made available by the States of Jersey to SoJDC; All current debt is properly structured and linked to specific developments and all developed assets are worth more than the debt provided to construct that asset. Furthermore, the Company’s debts can either be serviced by the rental generation from the assets or repaid through disposal and still provide a surplus.
Resource Implications: There are no financial implications for the States and dividend assumptions will remain in line with the Medium Term Financial Plan 2016-2019.
Action required: Head of Decision support to advise the Director of Treasury Operations and Investments once the decision is signed. The Director of Treasury Operations and Investments to inform the Finance Director of SOJDC that the Minister has approved the request. In accordance with Section 12 of P.73/2010, this decision will not take effect for 15 days from the date of signing.
Signature:		Position: Senator A J H Maclean, Minister for Treasury and Resources
Date Signed:		Date of Decision: