St. Kitts – Nevis PM Says Italian Multi-Million Dollar Debt Was Settled

St. Kitts - Nevis PM - Dr. Denzil Douglas
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St. Kitts – Nevis PM – Dr. Denzil Douglas
Photo By Erasmus Williams

Basseterre, St. Kitts – Nevis
October 13, 2010 (CUOPM)

St. Kitts and Nevis‘ Prime Minister Hon. Dr. Denzil L. Douglas says his Administration has successfully settled a multi-million debt owed to SACE, an Italian government entity.

Dr. Douglas told the Nation during a Press Conference on Wednesday that when his Government entered office in July 1995, it was discovered that the Government of St. Kitts and Nevis under the Dr. Kennedy Simmonds administration had entered into a loan agreement as Guarantor for a loan of USD$25,330,000 to Nautical Trading St. Kitts Limited, who was the principal borrower under a Loan Agreement. 

“The other parties to the Loan Agreement were an overseas company Morgan Grenfell & Co. Ltd, as manager and agent; and several bankers as lenders.  The purpose of the loan was the purchase of three hydrofoiled vessels with an option to purchase an additional two.  The Agreement was signed by Prime Minister and Minister of Finance Dr. Kennedy Simmonds on May 30, 1986,” said Dr. Douglas in the statement prepared by the Ministry of Legal Affairs.

He noted that Nautical Trading St. Kitts Limited was a company incorporated on December 15, 1984, by the law firm of Terrence Byron with Vincent Byron as the sole director, and a Hyacinthe Byron as the Company Secretary.

“The loan was insured by SACE under the terms of an insurance contract entered into between SACE and Morgan Grenfell & Co. Ltd, as agents for the lending banks, dated August 14, 1986.   SACE is an export credit insurance agency of the Italian Government,” said Dr. Douglas.

The loan was disbursed and two Hydrofoils were purchased, came to St. Kitts and began operating and then suddenly disappeared.

“Nautical Trading St. Kitts Limited defaulted on several repayments of the loan. Pursuant to the Contract of Insurance, SACE paid the lending banks the indemnities due and owing under the Loan Agreement.  Then, in exercise of their rights of recovery, SACE demanded that Nautical Trading St. Kitts Limited repay the indemnities paid on their behalf,” said the Prime Minister.   

“As the company ““ a shell company – had no assets and was unable to pay its debt, SACE turned to the Government of St. Kitts and Nevis as Guarantor of the loan to honour the payment.  SACE threatened to bring legal action against the Government if the sum was not repaid,” said Dr. Douglas.

He said the balance of the loan as of June 30, 2007 stood at US$26,019,368.37 for the principal and interest; and US$24,477,999.81 for late interest.

“In an attempt to settle the matter, after the Italian Government continued to complain to my Government, my Government in June 2007 engaged the services of negotiators to act on behalf of the Government, to negotiate a cash settlement with SACE,” Dr. Douglas disclosed.

He stated that the Government and SACE agreed to settle the matter in the amount of US $4,000,000.00, the sum to be paid in two installments.   That settlement was captured in an agreement dated December 10, 2007 between SACE and the Government, which was represented by then Attorney General, Dr. Dennis Merchant.

The first installment (being US$2,000,000) was paid on December 15, 2007; and the balance of US $2,000,000.00 was paid on January 12, 2008 to SACE’s bank account at the Intesa SanPaolo S.p.A. Bank in Italy.  By letter dated February 26, 2008, SACE has notified the Government that the debt has been extinguished and the Government’s liability in this matter has come to an end.

“My Government was able to successfully negotiate a considerable reduction of the debt owed to the Italian agency, SACE; and has paid the compromise amount that was negotiated in the Settlement Agreement.  In so doing, my Government has wholly satisfied and honoured the obligations that were created by the previous PAM Administration in its ill-advised transaction by guaranteeing a multi-million dollar loan for a shell company,” said Prime Minister Douglas.

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