contd....
 

Other points to note are:

1. the size of the portfolio had decreased by US$19Million since May 1, 2001 when due diligence was carried out. To account for this fact, and since the purchase price was arrived at on the basis of the earlier size, FINSAC agreed to transfer to the Jamaican Redevelopment Foundation the Island Life Centre in New Kingston at an imputed value of US$7.5Million on the following terms:

- the purchaser has three years to dispose of the real estate and pay FINSAC 30% of the net proceeds. Until the building is sold, FINSAC will receive 30% of any net rental income generated; and

- if at the end of this period the building is not sold, the parties will agree on a market value for the property through the use of independent valuators. FINSAC will then be paid 30% of the determined market value within fourteen days after the value has been established.

2. The arrangements that have been made between debtors and FINSAC will continue in effect and are legally binding on the purchaser, unless replaced by the mutual agreement of the debtor and the purchaser in the future.

Although the sale of the portfolio was the major thrust of FINSAC’s NPL efforts for the year, the company continued to derive as much value as possible from the portfolio, with encouraging results. During the financial year 2001/2002, loan accounts with a total value of J$3.785Billion were restructured and/or rescheduled at interest rates of 12%-15% for United States dollar loans and 25% - 30% on Jamaican dollar loans. Rescheduled loans are those loans for which the debtors have proposed a new timetable for repayment, which has been accepted by FINSAC. Restructured loans on the other hand, are those loans where the debt itself may have been compromised and new terms for repayment agreed, based on the debtor’s financial position as determined by FINSAC. Total cumulative collections on Non-Performing Loans as at March 31, 2002 stood at J$5.929Billion.

REAL ESTATE AND OTHER PHYSICAL ASSETS
FINSAC manages primarily the remaining properties owned by Jamaica Mutual Life Assurance Society, Crown Eagle Life Insurance Company Limited, as well as properties acquired from intervened financial institutions as part of a package of assistance. These include Life of Jamaica Limited (LOJ), from which FINSAC acquired a number of commercial properties in 1999, and more recently, companies in the National Commercial Bank group of companies (formerly majority-owned by FINSAC) through the December 2000 Scheme of Arrangement that saw the reorganization of that group of companies.

In November 2001, FINSAC also took responsibility for managing over J$1Billion worth of properties formerly owned by LOJ Pooled Investment Funds Limited, the corporate vehicle used by LOJ to hold investment properties acquired for the benefit of the pension and investment funds it manages. These properties were acquired by FINSAC as part of a programme of assistance designed to realign the investment portfolio of these funds and restore much-needed liquidity to some of these funds. These properties include the New Kingston Shopping Centre, the Cinema II lands in New Kingston, 16A Half Way Tree Road, 16 Oxford Road and 61 Half Way Tree Road.

FINSAC’s divestment efforts for real estate and other non-core assets for the period April 1, 2001 to March 31, 2002 resulted in sales of J$1,708,571,001 bringing the cumulative divestment totals as at the same date to J$12,626,859,247. Cumulative real estate sales, as a component of that total for the same period were J$3,389,126,784. Rental income earned for the same period by the pool of commercial properties totaled J$77,788,031.  The table below sets out the data in relation to asset sales for the period.

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