Australian Capital Territory
Financial Management (Credit Facility) Approval 2013 (No 1)
Disallowable Instrument DI2013—40
made under the  
Financial Management Act 1996, section 59 (5) (Borrowing by territory authorities) 

1	Name of instrument

This instrument is the Financial Management (Credit Facility) Approval 2013 (No 1).
2	Commencement 

This instrument commences on the day after its notification day.

3 	Credit facility approval—Act, section 59(5)

In accordance with section 59(5) of Financial Management Act 1996, I, Andrew Barr, Treasurer, approve a credit facility for the University of Canberra (UC) from the territory banking account (Credit Facility).

4	Purposes—Act, section 59(7)(a)

The Credit Facility will enable the purchase and redevelopment of Wing 4 Cameron Offices, 70 Chandler Street Belconnen (situated at Block 7, Section 44 Belconnen) (Wing 4 Cameron) for student accommodation which will result in 131 dwellings consistent with the UC’s obligations under the Commonwealth NRAS arrangements.

5	Credit Facility consistent with UC functions—Act, section 59(6)

The functions, inter alia, of the UC as set out in section 6 of the University of Canberra Act 1989 are:
“To provide facilities and courses for higher education generally, including education purposes appropriate to professional and other occupations, for students from within Australia and overseas.”
The purpose of the Credit Facility as set out in Item 4 is consistent with these functions.

6	Maximum amounts—Act, section 59(7)(b)

The maximum amount of the Credit Facility, including any capitalised interest, must not exceed $24 million. 

7	Conditions of approval—Act, section 59(7)(c) & 59(8)

(1)	The following conditions apply to the Credit Facility:

(a)	To support the Credit Facility, the Territory will take security in the form of a first registered mortgage over Wing 4 Cameron. 

(b)	Upon satisfaction of the conditions set out in Item 7(1)(m) the Credit Facility may be drawn down by the UC in instalments and at times to be agreed between the Territory and the UC as the purchase and redevelopment of Wing 4 Cameron is carried out.

(c)	The Credit Facility expires on 1 July 2028 at which time the UC must have fully repaid all of the principal and interest owing on the Credit Facility.

(d)	The rate of interest payable to the Territory on the Credit Facility will be a fixed rate set on the date of the first drawdown against the Credit Facility and applicable until 1 July 2028.

(e)	The fixed interest rate will be established by the prevailing Commonwealth Government 21 April 2027 bond rate (International Securities Identification Number AU3TB0000135 sourced from Bloomberg) plus the ACT Government market borrowing margin to the Commonwealth Government of 1.05% plus the lending margin of 0.75% being offered to the UC.

(f)	Interest accrues at the fixed interest rate on the daily outstanding balance of the Credit Facility between the date of the first draw down and 30 June 2014 and will be capitalised on 30 June 2014.

(g)	The UC must make interest only payments in quarterly instalments due on 1 July 2014, 1 October 2014, 2 January 2015 and 1 April 2015.

(h)	From 1 July 2015, the UC must pay interest and principal, in aggregate level quarterly instalments on 1 July, 1 October, 2 January and 1 April in each year with the first of such payments to be made on 1 July 2015 and thereafter up to and including final repayment on 1 July 2028.

(i)	The UC may, at any time and from time to time, make a repayment of the whole or any part of the principal and interest then outstanding.  In the event of any early repayments, the remaining quarterly interest and principal repayments will be reduced so that the final date for repayment of the Credit Facility remains at 1 July 2028.  In the event of a whole repayment, the remaining quarterly and principal repayments will be reduced to nil.

(j)	The UC must use their best endeavours to ensure Wing 4 Cameron is redeveloped and maintained to industry standard.

(k)	The Territory is to receive annual reporting from the UC in relation to the operation of the student accommodation and must otherwise have reasonable access to inspect the Wing 4 Cameron and operations of Wing 4 Cameron.

(l)	If the UC fails to complete the purchase and redevelopment of Wing 4 Cameron by 30 June 2014, unless the Territory otherwise agrees, all of the principal and interest then outstanding on the Credit Facility will be repayable in full by 31 December 2014.

(m)	The following pre-conditions must be satisfied before any draw down of the Credit Facility by the UC is permitted: 
i.	The Under Treasurer must negotiate and execute, on behalf of the Territory, a credit facility agreement in respect of the Credit Facility on the terms set out in this instrument and including such ancillary terms as the Under Treasurer deems appropriate (which must not be inconsistent with the terms set out in this instrument); and
ii.	The UC must provide the Territory with the title deed to Wing 4 Cameron and the mortgage document signed by the UC in registrable form.

(n)	If the pre-conditions in Item 7(1)(m) are not satisfied by 5.00pm on 31 July 2013 or such later time approved by the Under Treasurer, then the approval of the Credit Facility in accordance with Item 3 is withdrawn.
.

8	Review of Credit Facility —Act, section 59(10)

The Credit Facility will be reviewed annually.  The review will consider matters including, but not limited to, compliance by the UC with the approved terms of the Credit Facility, the ongoing ability of the UC to meet the repayment obligations and the appropriateness of the Credit Facility in light of the then prevailing Territory policy and all other relevant circumstances.

Andrew Barr MLA
Treasurer

    7 May 2013