NCB Capital Markets Limited (NCBCM) has arranged $1.8 billion of financing for Air Jamaica, under a revised deal that restructures a previous loan underwritten by the brokerage.

NCBCM had originally arranged $3.1 billion of financing for the airline from local and external sources.

The earlier loan, priced at 22.51 per cent, was guaranteed by the Government of Jamaica in June.

But, in seeking another guarantee from lawmakers on December 8, Finance Minister Audley Shaw said, NCBCM had only cobbled together about $1.3 billion of what was to have been the first tranche of $1.76 billion - leaving a gap of $460 million.

The parties agreed, however, to tag on the difference to the second tranche of $1.34 billion, increasing the revised financing package to $1.8 billion, which would finance the airline's 2009/10 business plan, as it heads towards divestment.

Shaw also said a decision on the airline's future was imminent.

It was widely expected at mid-year that the owners of Spirit Airlines would have been the buyer, but since then Prime Minister Bruce Golding has thrown doubts on the sale, saying it would end up costing the government US$200 million to offload the loss-making carrier, whose deficit is in the region of US$1.2 billion.

Last week, Shaw said the Government was committed to selling the carrier.

Decision on Air j's future imminent

"It is now at a stage where I can indicate that a decision on the future is imminent," said Shaw, responding to queries from Dr Omar Davies, Opposition spokesman on finance.

The finance minister said NCB Capital Markets' inability to deliver on the first tranche was the result of a liquidity issue, but that the brokerage subsequently negotiated a private placement.

"Fortuitously, that arrangement came in at 3.5 per cent cheaper than the original proposed placement. So, against this background, it was considered prudent to accept that offer," he said.

The new loan comes at a cheaper price of 19.04 per cent.

The second guarantee was approved by lawmakers.

The airline is said to have improved its operating efficiency under the business plan being rolled out by president Bruce Nobles.

business@gleanerjm.com