An invitation by Amalgamated Telecom Holdings(ATH) to existing shareholders to buy up more shares is still being considered by the Fiji National Provident Fund (FNPF).
FNPF is the major shareholder, owning around 72% of the telecom group.
"We are still assessing that investment," FNPF CEO Jaoji Koroi told Islands Business.
"It's a strategic investment for us. ATH has grown the past years into the Pacific and the rights issue is to fund that growth. Of course the environment now has changed (due to COVID-19) so we have to assess [it] differently," Koroi said.
ATH is listed on the South Pacific Stock Exchange (SPX) and announced late April an intention to raise F$126.76 million (US$58.32 million) via a 1 share for 6.66 rights issue, at a discount price of F$2 (US$.91) per share.
The rights issue, which was to have closed on June 18, has now been extended to July 17.
While confirming FNPF's participation in the Fiji Government-guaranteed loan facility of F$455 million (US$207 million) approved by Parliament last week, FNPF CEO Jaoji Koroi said interest payments, deferment and related issues will be discussed with the borrower under the Fund's new lending facility, in which its borrowers can make suitable arragements in light of difficulties faced due to COVID-19.
"FNPF has always had a strategic relationship with Fiji Airways. We're a long term investor and we see Fiji Airways as a strategic asset for Fiji because tourism is quite important and having a strong airline is crucial for our investments in the tourism sector. As you know after the Global Financial Crisis, we had that investment with Fiji Airways through a loan and that has yielded good results over the years. In fact, members have received close to $65.1million in interest from that lending facility since then. We're going through a very important cycle, and we still need to look to the future. We still need that strategic asset to grow and continue to bring back what we all look forward to, which is a strong tourism sector," Koroi said.
"It's a matter of looking over the next two years or so, we understand the capacity and what needs to be done. I think Fiji Airways has also done internal restructuring of their balance sheet in terms of what to let go and what to keep, so that it can be a finer company that we can improve. So we're looking at participating in that facility and because it's now a government guarantee, we're taking a risk on the lending." Koroi said.
Attorney General and Minister for Economy Aiyaz Sayed-Khaiyum detailed the loan structure in Parliament last week as comprising domestic borrowing (F$191.1m) and offshore borrowings (U.S$117.1m), or a total of F$455million spread over a three year period, effective May 30, 2020.
"Companies like ADB and all these international funding agencies are also looking to be part of that facility, so I think the message is: ok, two years is going to be tough but we need Fiji Airways to come out strongly for the future of the country," Koroi said, when asked about the likelihood that the national airline may not be able to pay anything in the first year since tourism is still crippled.
As revealed by Sayed-Khaiyum last week, $56.3 million is coming from FNPF while the rest will be borne by other local agencies including the Reserve Bank of Fiji and ANZ Bank.
FNPF, whose exposure in the tourism sector is around 16 percent, owns most of Fiji's major hotels and hotel properties in Fiji's tourist belt in Nadi as well as in Suva.
*Editor's note: This article was updated on June 5 after FNPF provided updated figures.
The Fiji National Provident Fund says its has paid out F$49.1 million (US$22m) to 77,507 members under the COVID-19 withdrawal scheme, with most applications now processed.
The FNPF says 86,854 applications in total were lodged, and close to 4,600 members will be paid out this week.
Government subsidies accounted for more than $6.67 million, the remainder came from members’ own funds.
Chief Executive Officer Jaoji Koroi says withdrawals related to Tropical Cyclone Harold continue as well. The FNPF has received around 722 applications for that withdrawal scheme and paid out $797,194 to 606 members. “Our teams have completed inspection for the maritime zones – specifically for Kadavu, Vatulele and a few islands in the Lau Group,” says Mr Koroi. “Majority of members contacting the Fund do not live in the affected area but their homes were damaged. These members have been advised to apply for the housing assistance scheme to repair their homes provided they meet the qualifying requirements”, Mr Koroi adds.
The TC Harold withdrawal scheme only targeted members whose homes were damaged and also reside in areas that were declared a natural disaster area by the National Disaster Management Office.
The Fiji National Provident Fund is eyeing good bargains in the assets-for-sale space, as the coronavirus pandemic coughs up distressed companies either looking for cash or offering themselves up for sale.
FNPF CEO Jaoji Koroi said while the pandemic will affect its overall investment returns, considering its exposure to overseas share markets as well as the now crippled tourism sector locally, there are also buyout opportunities that the fund will explore.
"One of the key advantages of the fund is that it is a long term investor. We're here for the long term so, of course the first few years (of recovery) will be a problem but this is also a good opportunity to pick up good assets. A lot of assets will be there at discounted prices so we're preparing our cash flow based on that too, with that (buying discounted assets) in mind," Koroi told Islands Business in a press briefing in Suva today.
As Fiji's only national forced-savings pension fund for workers, the FNPF, via government regulations, has played a central role in coming to members' rescue in events of natural disasters, including the current coronavirus pandemic, which has been declared a natural disaster in Fiji.
With over F$710 million is cash and term deposits in its balance sheet, the Fund said it has enough liquidity to pay out members eligible for its COVID-19 assistance, attend to its normal members services as well as to invest.
"Cash is king during these times so if you have cash, you get the opportunity to look for good assets," Koroi said.
The Fund is expecting the impact from the statutory reduction in employees and employers' contributions - announced by government as a form of relief for workers and businesses in its COVID-19 response budget last month - and the current unemployment scenario in Fiji to begin reflecting in its cash flow from next month.
"Based on what we're receiving for March and February collection, we're still meeting our target, which is about F$50million per month of contributions. We'll be receiving the April contributions in May so that will start to reflect the reduced contribution rates as well as the unemployment now. We're factoring that into our cash flow moving forward," Koroi said.
Also on the casualty list is the Fund's offshore investments, particularly its stakes in the global stock markets, which are currently experiencing historic lows as major economies enter recession territory as a result of the COVID-19 crisis.
"We have an exposure there of around F$70million, all in the Australian market. We've seen a reduction of around 23 percent in the value of that. We're booking that on a daily basis so the impact is really flowing into the income statement, so, on a daily basis, the impact of those losses are in our books. It used to be F$70million, now it's about F$50million," Koroi said.
FNPF has a diversified offshore investment portfolio and owns shares in other unlisted securities such as in the BSP Bank in Papua New Guinea, which Koroi said have performed well and will offset losses in its stock market investment.
The fund is also expecting a big dent in its tourism investments, which represent around 16 per cent of its total investment portfolio.
Koroi said it is using the current stand-still in tourism to refurbish its hotels, among them the Sheraton and Westin hotels in Denarau. Also on the cards is a new contract with an international hotel management chain to manage its Suva-based Grand Pacific Hotel.
The Fund is however expecting positive results from its investment in government securities, particularly its returns from government bonds, which comprises around 40 per cent of its total investment portfolio.
Koroi assured members that their retirement fund is safe as it has in reserve more than what is required of it by law to reserve and to remain solvent.
"We're a long term investor so we're able to ride the lows and highs of every economic cycle," he said.
FNPF so far has over F$7.4 billion in total assets and $6.1billion in members' funds.
The Fiji National Provident Fund (FNPF) said it has enough cash to pay out to members who lose their jobs as a result of the COVID-19 pandemic's impact on the Fijian economy.
Amid growing concerns that the Fund is being used to compensate for government's lack of direct assistance to out-of-work Fijians when it unveiled its COVID-19 response budget last week, FNPF CEO Jaoji Koroi said the superannuation fund's liquidity and solvency were healthy and robust that there was no need for alarm.
"For your comfort, we have about F$400million (US$175million) cash in the banking system and that's not including the deposit we hold with them," he said in a media conference yesterday.
"We have projections for the next 12 months and we're adequately covered in terms of our cash flow so as far as we're concerned, there's sufficient funds for us to meet our obligations," Koroi said, adding that FNPF recorded a net reserves of F$1.3 billion last financial year and solvency was also currently being reviewed.
The Fijian government in its COVID-19 response budget, had announced that FNPF members employed in the country's tourism sector - the first to buckle under COVID-19 - may withdraw up to F$1000 (US$437) to assist them as the country waits for normalcy to return.
As well, members in the currently-quarantined Lautoka city were eligible for F$500 (US$218) each.
Some 43,000 workers are immediately eligible under the two assistance measures but as money would be deducted from their own accounts, Koroi said not all may want to withdraw.
However, in case they do, around F$40m (US$17.5m) was ready to meet that obligation.
"It's doable," he said. "We did Cyclone Winston [FNPF's relief package to eligible members after Cyclone Winston ravaged the country in 2016] and that was around F$276 million, so cash is sufficient to meet all these things."
The Fund already offers unemployment benefit for its members but this has been reduced from F$2,000 per member to F$1,000 to streamline processing.
It is expected that members outside the tourism sector who lose their jobs during these harsh times may apply for that.
As Fiji's largest financial institution with over F$7billion (US$3billion) worth of assets in 2019 and half the population as its members, FNPF is a major force in the stability of the country's economy, with around 42 percent of that $7b invested in Fiji government securities in Fiji and in the international financial markets.
It has not ruled out buying more in the upcoming government issuance to finance the F$1billion COVID-19 response budget.
"We're no different from any other superannuation funds as everywhere else, they're all going for treasury bills. The stock markets have fallen by 20-30 percent so this [government securities] is a safe investment that is giving us the returns," Koroi said.
The Fund is also a significant investor in the tourism sector, being owner or part owner of some of Fiji's top hotels, which have either closed or are in the process of closing as the global tourism industry is brought to its knees by COVID-19.
Koroi said the FNPF will use the current slowdown to refurbish some of these hotels.