The first tranche of funds from ASG’s $10 million investment in the United Arab Emirates Pension Fund did not happen.
September 18 was when the window of opportunity was to open for the investment company used by ASG McKinley Beech Tree to receive the first $20 million.
The Governor’s Advisor for Finance, Brett Butler, met with Senate President Tuaolo Manaia Fruean this morning to provide an update on the status of the investment. He gave Tuaolo a letter from MBT (McKinley Beech Tree) Structured Finance LLC, addressed to Governor Pulaalii Nikolao Pula and Butler, dated Sept 18, which said that there was a delay.
The letter, signed by Director Gregory D.Burkholder said, “As you are aware we were to have conducted the closing with the monetizer today.
“We did engage to effect the closing however, during the presentation and review of the closing settlement statement a few discrepancies we (were) discovered by the MBT side of the transaction. As a result lengthy discussions with the monetizer ensured (ensued) and we began the process of reviewing all supporting documentation for the transaction”.
The letter goes on to say, “The discrepancies were acknowledged and confirmed by the monetizer’s side of the transaction. As a result, the monetizer is conducting a special work session on Sunday to ensure that the closing settlement statement is properly amended to complete accuracy, and will then deliver a formal draft copy to MBT for review prior to finalizing the closing settlement statement”.
Burkholder offers apologies for the delay. He wrote, “The process has created a delay for which we extend our sincerely (sincere) apologies. The monetizer also extends their sincere apologies for the delays and asked that I convey to you that they are working diligently to rectify the discrepancies, amend the closing settlement statement and then proceed to closing and funding as quickly as possible”.
So when is the funding expected? The MBT official doesn’t give a specific date. “Regarding how this may potentially affect the revised funding date and transfer of funds back to ASG, I likely will not know until Monday when we are able to re-engage and proceed with the closing and funding of the transaction. Rest assured the transaction will close and the first tranche, which includes the original capital placed by ASG will be remitted to ASG as promptly as possible.
“I will remain with you as quickly as I receive updated information from the monetizer”. (KHJ News has quoted verbatim the text of the letter and where there are errors we have put the correct words in brackets)
According to the agreement that ASG signed with McKinley Beech Tree the first tranche of $20 million was to be received 30 days after the transfer of the $10 million plus $100,000 fee was made by ASG. The transfer took place in March. The second tranche of $30 million was to be made 30 days after the first tranche and the final one of $50 million would follow 30 days after. As such ASG was to receive $100 million plus the $10 million it invested by the end of June.
At his meeting this morning with Butler, Senate President Tuaolo said he informed Butler that he should address the Fono to explain the latest development. He planned that this would take place during the budget hearing. At the start of the budget hearing Tuaolo said the Governor had relayed to Butler that he wanted to address the Fono in person about the status of the investment. However the feeling of senators was there was no need for the Governor to appear, that it was sufficient to have Butler give the update.
House Speaker Savali Talavou Ale did not support having Butler speak at the budget hearing about the investment, saying it did not relate to the budget review.
This was also the view of Senator Togiola Tulafono. Togiola said it was the Senate Government Operations Committee that was looking into the investment and the committee is continuing its review of the matter. But he welcomed the letter that Butler provided. He said it shows that there are problems. And it was his gut feeling that the problems will not end here. “They will continue next week,” he said.
The joint budget committees then continued review of the budgets for Special Programs and Capital Improvement Projects.
