The Tribune

• Not in favour of Gov't 'majority' Freeport control

• Sir Jack's grandson says family is 'here to stay'

• Warns fight over Port is 'only to GB's detriment'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Hayward family is willing to part with some of its Grand Bahama Port Authority (GBPA) ownership interest to aid Freeport's revival, it was revealed yesterday, but does not believe the Government should take "majority" control.

Rupert Hayward, grandson of former GBPA co-chair, Sir Jack Hayward, told Tribune Business his family is "here to stay" - and ready to sell a portion of its 50 percent GBPA equity ownership "to the right partners at the right price" - so that Freeport can attract the investment and skills it needs to drive the city's transformation.

Speaking after Prime Minister Philip Davis KC last week placed the GBPA and its owners, the Hayward and St George families, on notice that he plans to take "decisive action" to reverse Freeport's near two-decade decline, he said himself and "blue chip" partners have already presented the Government with a plan to do just that.

Warning that "fighting between key stakeholders will only be to the detriment of the people of Grand Bahama", Mr Hayward told this newspaper he hopes Mr Davis will "actively support" his proposal given that the Government plays a major role in it, with collaboration between Nassau and the GBPA is critical to driving Freeport forward.

"We are long-term stakeholders in Grand Bahama, long-term shareholders in the Grand Bahama Port Authority (GBPA) and its group of companies," Mr Hayward said. "We recognise change needs to happen, and we recognise a very powerful shareholder base needs to be created.

"We think the Hayward family, given its 70 years' of experience, have a unique role in protecting Grand Bahama and have a track record of bringing significant investment to the island. The Government needs to be involved but, should government have a majority stake? No."

Besides creating a shareholder base "with the requisite skills to take Freeport forward", and address issues such as large-scale masterplanning, sustainable infrastructure and climate change resilience, Mr Hayward agreed that an updated and modernised Hawksbill Creek Agreement is critical to the city's reawakening.

The Prime Minister last week complained that the model bequeathed by Freeport's founding treaty "doesn't work", especially when it comes to attracting fresh investment to Grand Bahama. "A critical component is a 21st century Hawksbill Creek Agreement and regulatory framework, which provides benefits to the people of Grand Bahama, businesses and licensees, and so we can solicit large-scale investment for the benefit of all the island," Mr Hayward said.

"That will come through real partnership with the Government. Fighting between key stakeholders will only be to the detriment of the people in Grand Bahama. We have put a plan to the Prime Minister, with best-in-class investors who are blue chip and well-capitalised to do it, and we hope he actively supports it....

"We have a plan, we have the people to help us execute it, and the Government are a part of that plan. We hope they embrace the plan. We are happy to sell down some shares to the right partners, at the right price, to make this happen. Government needs to play their part. We should be working together to put a world-class framework together, and the GPBA should evolve into a world-class entity, which it can do with the right partners."

Mr Hayward again did not identify the "partners” he was referring to, or who his family might be willing to sell a portion of their 50 percent equity stake in the GBPA and Port Group Ltd to. However, he has been heavily involved with the multi-party deal to develop a Six Senses resort at the 30-acre Barbary Beach site previously owned by Marriott.

That agreement features Weller Development, which is spearheading the largest US urban regeneration in Baltimore via the 235-acre Port Covington site, and Pegasus Capital Advisors, the $10.6bn private equity group focused on investing in sustainable projects and the only such group accredited as a fund manager by the Green Climate Fund. Multiple Freeport-based sources have previously suggested this partnership could lead to bigger things beyond Six Senses.

"We're here to stay, will do what is in the best interests of Grand Bahama, have the right people and are willing to work with the Government. They're a part of it," Mr Hayward reiterated yesterday. "We will continue to fight for the best possible future for Grand Bahama, and continue to fight for the people of Grand Bahama's best interests.

"We continue to offer partnership and collaboration with this government, and any government, as long as they intend to do right by Grand Bahama." Mr Davis, though, last week used the platform provided by the 2023-2024 Budget address to assert that Freeport's founding treaty, the Hawksbill Creek Agreement, "does not work" and that the GBPA's governance model "must change" if the city is to "realise the promise, growth and prosperity" it aspires to.

Using Grand Bahama's contracting economy as his launch pad, Mr Davis told the House of Assembly: "Grand Bahama contributes 12 percent of the overall GDP of The Bahamas, yet its economy declined by 9 percent compared to the previous year. There was a silver lining as the tourism sector witnessed a slight increase in 2022, which was evident in the growth of the accommodation and food service industries.

"Unfortunately, the statistics show a prolonged decline in the Grand Bahamian economy. The evidence confirms the view of my government that the Hawksbill Creek Agreement economic model, which was meant to attract foreign direct investment, does not work.

"Furthermore, in our view, the governance model of the Grand Bahama Port Authority must change. The Hawksbill Creek Agreement does not work, the Port Authority must change, in order to realise the promise, growth and prosperity which we all desire," the Prime Minister continued.

"Additionally, The Government of The Bahamas has serious concerns regarding the compliance of the GBPA and its related companies with the terms and conditions of the Hawksbill Creek Act [Agreement] and its subsequent amendments.

"Previous administrations have made efforts to tackle the situation, but the issue is clearly systemic and fundamental. We believe the time has come for decisive action. In due course, we will make a separate, detailed announcement. That may be during the course of the debate."

Tribune Business revealed earlier this year that the Government has been examining whether change at the GBPA is best achieved through either a private buyer acquiring the Hayward and St George families’ ownership interests, the Government doing itself or the regulatory and quasi-governmental powers being devolved back to Nassau.

However, given the Prime Minister's vague warning and lack of specifics, the main impact of his address thus far has been to undermine certainty and business/investor confidence when it comes to Freeport given the lack of clarity surrounding who will ultimately be in control of the city.

It is understood the Hayward and St George families are confident their position is legally sound, and that the Government will struggle to force them to sell using what they perceive as bullying tactics. However, the GBPA owners, in a 2016 Memorandum of Understanding (MoU) signed with the Christie administration, committed to masterplan the development of their landholdings and seek a buyer for their interests within specified timelines. None of these conditions appear to have been fulfilled.

The GBPA, while described by some as a ‘regulatory shell’, still possesses considerable powers that include business licensing, building code and environmental enforcement, city management, and the power to levy fees and service charges together with the operation of a free trade zone that offers multiple forms of tax relief to investors.

However, its income-earning assets have been transferred to Port Group Ltd. These include the 50 percent equity stakes in Grand Bahama Development Company (DevCO) and the Freeport Harbour Company, likely to be the two families’ most valuable assets, together with interests in multiple other companies such as Freeport Commercial & Industrial, another major landowner.

Should the Government seek to take over the GBPA’s regulatory powers, one source said it would amount to an “abrogation” of the Hawksbill Creek Agreement and raise multiple legal issues that would have to be addressed. Among these, they added, would be the provision that requires four-fifths (80 percent) of licensees to approve the devolution of quasi-governmental authority to a local government-type entity.