(National Insurance Corporation)- On March 17th 2021, the NIC received EC$29.4 million from Cabot Saint Lucia Inc. This amount represented full repayment of the loan of $27 million and interest accumulated to date of $2.4 million.
The interest represents a 10% return over the 20 months since disbursement of the loan, as compared to the return of 5% on the NIC’s total investment portfolio for the same period. During that same period, moneys on our call account earned 1/4 of 1% and fixed deposits averaged 2.35% per annum.
This repayment is especially noteworthy in light of the conditions occasioned by this unprecedented pandemic which has resulted in a number of requests to financial institutions for moratoriums on loan and other repayments falling due. It also illustrates the confidence of the borrowers in the resurgence of the tourism industry after COVID, which augers well for the recovery of our local economy.
The Investment
NIC invested EC$27.5 million by way of loan in a project which was expected to position Saint Lucia as the Caribbean’s pre-eminent golf destination and resort community by providing world-class golf and resort amenities including 2 restaurants, a beach club, spa and fitness facilities, a mix of luxury hotel suites, 2 and 4 bedroom villas for resort guests and a community of home owners. The total project cost was estimated at US$92 million (EC$250 million).
The loan was 100% secured and structured in a manner that would cause the NIC minimal exposure during the currency of the loan. The security held by NIC included a first mortgage debenture on the assets of the borrower including 360 acres of land that was independently valued at approximately EC$91 million in August 2018 – over three times the loan amount. The investment, in addition to increasing the National Insurance Fund, was also intended to benefit the economy of Saint Lucia, not only from the additional visibility internationally as a differentiated tourism destination (given that its economy is underpinned by the tourism industry), but directly through the generation of employment both during the construction phase and subsequently with the operation of the resort.
The early repayment of the loan bears out the sagacity, efficacy and thoroughness of the due diligence process undertaken by the NIC.
