Borrowings to top $130m – investment bank hired.
Local council debt is scheduled to climb even further – and a recently hired investment bank will help those borrowings go sky high.
Mountain Scene late last month revealed that between Queenstown Lakes District Council and its quangos, total QLDC group debt skyrocketed 91 per cent during the past financial year.
Total debt was $92 million and cost $6m in ratepayer funds to service.
But you ain’t seen nothing yet – the QLDC group debt mountain has some way to grow, according to newly released minutes of QLDC’s little-known “tenders board”.
Those minutes record how QLDC’s 10-year plan, drawn up in 2006, calls for debt levels to rise to more than $130m by 2016 – another $38m piled on to existing debt.
The tenders board meeting was a two-person tete-a-tete between senior QLDC consultant Roger Taylor and finance boss Stewart Burns.
QLDC needs “professional treasury risk management”, say Taylor and Burns.
Enter – drum roll – Bancorp, billing itself as “New Zealand’s most innovative and dynamic investment banking organisation”.
QLDC’s present debt is funded via BNZ – an arrangement Bancorp helped the council negotiate as a one-off job – but Taylor and Burns say “further funding facilities including the exploration of a bond issue will be examined in the future”.
“Given the current economic climate and the projected growth in debt, professional treasury risk management is an appropriate service for council,” they add.
Bancorp offers “expert guidance” so the investment bank was asked for “a proposal to provide comprehensive independent treasury advice for the next 12 months”.
According to Bancorp’s website, its treasury services division “has the largest team of independent treasury risk management advisers in Australasia”.
Clients include “small- to medium-sized exporters, large corporates, multi-nationals and local government institutions”.
Its “flat-fee structure” helps advisers act in the best interests of clients, says Bancorp – presumably because the adviser’s fees are in lieu of commission from lenders.
And that flat fee? To you, QLDC, just $27,000 for the first 12 months, says Bancorp.