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MBJ Airports Limited (MBJ) has successfully negotiated a five-year extension on its US$60-million credit line with the Bank of Nova Scotia.
The loan extension will provide MBJ with greater financial flexibility as it continues to manage and upgrade Sangster International Airport in Montego Bay. The original loan commenced in 2020 and ran for five years.
“GAP announces that its subsidiary, MBJ, has extended the maturity date to October 4, 2029, of its US$60-million credit line with the Bank of Nova Scotia and the Bank of Nova Scotia Jamaica Limited,” stated the Pacific Airport Group (GAP), the Mexican-based airport operator.
GAP operates 12 airports in Mexico and two in Jamaica, namely, the Sangster International in Montego Bay and Norman Manley International in Kingston. MBJ is 74.5 per cent owned by GAP and the balance by Canada-based Vantage Group.
The loan currently carries an interest rate of roughly 6.4 per cent based on a 200-basis point add-on to the current 4.4 per cent benchmark interest rate for secured overnight financing, or SOFR. The loan will be repaid in 10 equal semi-annual instalments. The extension came at a cost, with MBJ incurring a US$300,000 commission fee to secure the revised terms, the report stated.
MBJ operates the island’s busiest airport at Sangster International, which handles a significant portion of the country’s tourist arrivals.
For the quarter ending March, 428,000 passengers passed through Kingston’s airport, or 9.2 per cent more than a year earlier. In Montego Bay, however, 1.34 million passengers passed through, or 8.1 per cent fewer than a year earlier.
The loan along with cash from operations were geared at financing the US$111 million in investments projects approved in December 2019 by its regulator of the airways, the Jamaica Civil Aviation Authority. These investments were to occur over roughly five years, but some of these projects were delayed due to the travel uncertainty surrounding the pandemic which started in 2020. MBJ, however, still made capital investments of US$10.7 million, US$11.7 million, and US$18.6 million, in 2021, 2022, and 2023, respectively, according to its 2023 annual report.
The 2024 annual report, slated for release later this month, will include its latest investments. The report, however, explained that in 2023, the capital expenditures resulted in the expansion and renovation of the terminal building; the modernisation of equipment, such as the replacement of the airports’ IT system, jet bridges, HVAC and air handling units, X-ray machines, fire detection and intrusion-detection systems; as well as the installation of an additional 2-megawatt solar photovoltaic power plant.
“In December 2020, as a result of the COVID-19 pandemic and its economic impact, the regulator of airports, the Airports Authority of Jamaica, granted MBJ a deferral on its committed investments for 2020 so that these investments could begin in January 2022,” according to the 2023 annual report.
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