The following statement was released today regarding the latest Minimum Revenue Guarantee payment, by Aaron Adderley, President of Skyport…
The Minimum Revenue Guarantee is a mechanism built into the Airport Redevelopment Project Agreement that is designed to protect project lenders by ensuring that debt payments are met in severe revenue decline scenarios. Once the debt is paid off, the guarantee falls away completely.
Given the vulnerability of tourism and air passenger traffic in general over the past few decades, as seen in other cases, parties looking to make significant investments in Bermuda’s travel and tourism sector require some assurances to help protect those investments. The development of the publicly owned new passenger terminal facility by the private sector in what industry experts have described as a fair and balanced deal, is no exception.
While the minimum revenue targets were set considerably low to guard against the risk of the guarantee ever being triggered, the economic shock of the global pandemic has led to an unprecedented 85 percent drop in traffic, necessitating payments by the Government to protect the project’s lenders.
Both Government and Skyport have been duly following the prescribed Minimum Revenue Guarantee mechanics in the Project Agreement, which involve periodic contributions to the Minimum Revenue Guarantee Reserve Account followed by periodic reconciliations. The Account is accessible only by the project’s lenders. The process is unfolding in full compliance with the Project Agreement and importantly, occurs in the context of the successful delivery of a Bermuda owned, world class, new passenger terminal facility.
Skyport remains committed to working with the Government and industry stakeholders to bring about a recovery in air passenger traffic that will soon see the airport become financially self-sustainable once again.
For more information on the Airport Redevelopment Project Agreement, please visit the airport website here (www.bermudaairport.com/newterminal/project-faq).”