Loan to Jersey Post International Limited.

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A decision made (29/06/2006) regarding Loan to Jersey Post International Limited.

Subject:	LOAN TO JERSEY POST INTERNATIONAL LIMITED
Decision Reference:	MD-TR-2006-0082	Exempt clause(s):		n/a
Type of Report: (oral or written)	Written	Person Giving Report (if oral):
Telephone or e-mail Meeting?	n/a	Report File ref:		RF/1/27/06/06
Written Report – Title	Loan to Jersey Post International Limited	Written report - author		R.Foster - Acting Deputy Treasurer
Decision(s): The Minister approved loan sums totalling £4 million and authorises payment to Jersey Post International Limited.
Reason(s) for decision: The loan notes drawn up in respect of the loans are in accordance with the States decision under proposition P9/2006 ‘Draft Postal Services (Transfer) (Jersey) Regulations 200_’.
Action required: Inform Treasury Investments section to action the authorised payments on the due date of 1 July 2006.
Signature: (Minister/ Assistant Minister)			Date of Decision: 29th June 2006

Loan to Jersey Post International Limited.

TREASURY AND RESOURCES MINISTER

loan to jersey post international limited

1. Purpose of Report

1.1. The Minister is asked to approve a loan of £4 million to Jersey Post International Limited (JPIL), being the group holding company for the main trading company Jersey Post Limited (JPL), in accordance with the States decision under proposition P9/2006 ‘Draft Postal Services (Transfer) (Jersey) Regulations 200_’ (‘the Regulations’).

2. Background

2.1. The regulations include the rights of those employees currently participating in the Public Employees Contributory Retirement Scheme (PECRS) to remain within that scheme after incorporation.

2.2. To admit JPL as a member of PECRS, a lump sum contribution of some £12.7 million is required to be paid into the fund in respect of previously unfunded past service liabilities.

2.3. JPL has sufficient assets to meet this cost, but will be short of cash to make this payment on the revised entry date of 1 July 2006.

2.4. Paragraph 10 of the report to the Regulations makes it clear that the Minister, under the authority of Article 29(3) of the Postal Services (Jersey) Law 2004, intends to lend some £4 million to JPIL to fund this cash shortfall.

2.5. Five loan notes totalling £4 million have been drawn up by JPIL.

2.6. The Minister is now asked to confirm that the loan sum may be transferred.

3. Comments

3.1. Paragraph 10 of the Regulations states that the loan would be:

‘...over a maximum period of 5 years and bearing interest at a rate to be fixed at one per cent over the Bank of England Base Rate.’

3.2. Five loan notes of £800,000, each with an effective date of 1 July 2006, have been signed by the Directors of JPIL. These notes reflect the terms and conditions referred to in the Regulations.

4. Recommendation

4.1. That the Minister approves the loan sums totalling £4 million and authorises payment to Jersey Post International Limited.

5. Reason for Decision

5.1. The loan notes drawn up in respect of the loans are in accordance with the States decision under proposition P9/2006 ‘Draft Postal Services (Transfer) (Jersey) Regulations 200_’.

States Treasury Corporate Finance

10 July, 2006 for Decision Meeting 29/06/2006