EXCHANGE OF LETTERS CONSTITUTING AN AGREEMENT BETWEEN  THE GOVERNMENT OF NEW ZEALAND AND THE GOVERNMENT OF COOK ISLANDS CONCERNING THE RESTRUCTURING OF THE RAROTONGAN HOTEL LOAN

(Wellington and Rarotonga, 22 August and 10 September 1990)

ENTRY INTO FORCE: 10 SEPTEMBER 1990

No. 1 

The Honourable Mr DAVID CAYGILL 
Minister of Finance of New Zealand 

to

The Honourable Mr GEOFFREY HENRY 
Minister of Finance of the Cook Islands

Office of the Minister of Finance
Wellington

22 August 1990

My dear Minister of Finance,

I have the honour to refer to my Prime Minister's letter to you of 13 November about the restructuring of the Rarotongan Hotel loans concerning:

(a) the purchase of the Hotel and concluded by an exchange of letters between our forerunners on 1 and 5 April 1982 (hereafter referred to as ''Loan Agreement One"); and

(b) the deferment of capital payments on Loan Agreement One and concluded by an exchange of letters on 16 January 1985 and 7 February 1985 (hereafter referred to as ''Loan Agreement Two'').

The two loans have been revalued and expressed as an amount outstanding. This amount has been calculated as a net present value of the future stream payments to be made by the Cook Islands Government, discounted by the 5 year Government Stock rate on 17 July 1989 of 13.58 percent (annual basis).

Therefore I now propose on behalf of the New Zealand Government that an agreement be reached between our two Governments on the following terms:

(a) that the outstanding amount of principal with respect to Loan One be calculated as a total sum of $3,603,060 as at 30 June 1989;

(b) that the outstanding amount of principal with respect to Loan Two be calculated as a total sum of $376,403 as at 30 June 1989;

(c) that the New Zealand Government acknowledges the payment by the Cook Islands Government of $376,403 on 21 November 1989 as complete repayment of Loan Two.

(d) that the terms of Loan Agreement One remain on foot except as follows:

Principal Sum:	$3,603,060
	
Interest Rate:	13.84 percent over the term of the loan.
	
Schedule of Repayments by the Cook Islands Government:
	
Due 1 November 1990:	$553,861 - being $427,377 principal and $126,484 interest.
	
Due 1 November 1991:	$853,861 - being $750,054 principal and $103,807 interest.	

(e) that Loan Agreement Two be deemed to have been terminated at 21 November 1989;

(f) that the balance of Loan One, being in addition to (d) above, be paid by the New Zealand Government by way of set-off against the Cook Islands bilateral assistance programme, according to the following schedule:

$1,359,615 in 1989, being principal only (set off and paid in 1989);

$805,755 in 1990, being principal of $621,746 and interest of $184,009;

$505,755 in 1991, being principal of $444,268 and interest of $61,487.

If the foregoing provisions are acceptable to the Cook Islands Government, I have the honour to suggest that the present letter and your reply to that effect shall constitute an agreement between our two Governments.

Yours sincerely

DAVID CAYGILL 
Minister of Finance

No. 2

The Honourable Mr GEOFFREY HENRY
Minister for Finance of the Cook Islands

to

The Honourable Mr DAVID CAYGILL
Minister of Finance of New Zealand

Rarotonga

10 September 1990

Mr dear Minister of Finance

I have the honour to refer to your letter of 22 August 1990, which reads as follows:

[As in No. 1]

I have the honour to confirm that the foregoing is acceptable to the Government of the Cook Islands and that your letter and this reply shall constitute an Agreement Restructuring the Rarotongan Hotel Loan Agreements between our two Governments which shall enter into force on the date of this reply.

Yours sincerely

GEOFFREY A. HENRY
Minister of Finance
For the Government of the Cook Islands