The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Grand Bahama Port Authority (GBPA) purchaser offered to sell a majority 51 per cent stake in Freeport’s quasi-governmental authority to the Government once their acquisition closed, Tribune Business can reveal.

This newspaper can disclose for the first time details of the GBPA purchase proposed by a member of the family that founded the world-renowned Ryanair airline, working in tandem with a UK-based boutique investment house.

According to documents obtained by Tribune Business, Kell Ryan and Highgrove Securities were proposing to retain a 49 per cent stake in the GBPA, together with a Board of Directors majority, if their deal was consummated.

While their proposal met with little to no success, its contents give Freeport’s 60,000 residents and 3,500 GBPA business licensees a foretaste of the type of deal that may yet materialise should ownership of their city’s governing municipal authority change hands.

The resumption of legal warfare involving the late Sir Jack Hayward’s estate, following so closely behind the now-settled ructions in the St George estate, and coupled with Freeport’s depressed economic state will likely force the Government to seek a buyer for the GBPA.

A key element of any purchase will be what happens to the GBPA’s quasi-governmental and governance powers, and there is every likelihood that such a deal would be similar to the Ryan/Highgrove offer in that it would seek to ‘kick these’ back to the Government - either in whole or in part.

The last thing Freeport’s residents and GBPA licensees will want is to have Nassau resume control over their city’s operation, as they will have to put up with the same service quality as the rest of the Bahamas.

It thus becomes important that licensees stand up for their rights under the Hawksbill Creek Agreement, which requires that any amendment be approved by 80 per cent of them, with the quasi-governmental powers devolving to a local government-type authority on any GBPA sale.

That is the legal obstacle to proposals such as that contained in the Ryan/Highgrove proposal, which was detailed in a letter drafted by the latter’s Simon Whittley.

The document, dated October 21, 2014, and addressed to Sir Baltron Bethel, Prime Minister Perry Christie’s senior policy adviser, was never issued but still provides a fascinating insight into efforts to purchase the GBPA from its existing shareholder families.

“Following the successful purchase, Highgrove/Ryan would propose selling shares in the GBPA to the Government at a nominal value such that the Government would hold 51 per cent of the ownership in the company, with Highgrove/Ryan holding 49 per cent and the majority of seats on the Board of Directors,” the draft letter states.

It thus appears that the Highgrove/Ryan offer would have retained management and Board control under the proposed structure, but the Government would have been given a significant say in, and oversight of, Freeport’s governance.

The draft letter refers to a meeting with Mr Christie and his Cabinet ministers, and outlines “a comprehensive regeneration project” for Grand Bahama that will be known as ‘Project Sunrise’ and be undertaken by a vehicle called Hawksbill Property Holdings Ltd.

The document adds that Highgrove/Ryan are “exclusively advised” by Hannes Babak, the former GBPA co-chair who allegedly is at the centre of the latest rift in the Hayward estate - purportedly for engineering the removal of trustees who were seeking deals not in his interest.

The Highgrove/Ryan draft said the late Sir Jack was then prepared to sell his family’s 50 per cent GBPA stake for $100 million, while the St Georges “may now be encouraged to sell their own shares for a similar amount now that the tax concessions granted under the Hawksbill Creek Agreement are due to expire in 2015”.

“Whilst it is clear that considerable investment [in Freeport] occurred in the early years post the Hawksbill Creek Agreement being signed, it is now very apparent that little investment has occurred under the current regime installed at GBPA and Port Group Ltd,” the Highgrove/Ryan draft said.

“With regard to leaving the St Georges with some shares, we would respectfully decline such a request given their past history of frustrating development and their litigious approach while endeavouring to get their own way.”

Such assertions will not have endeared them to the St Georges. Tribune Business revealed back in February that the St Georges were “very resistant” to the Highgrove/Ryan offer and “pretty dismayed by what has been presented”, questioning whether the prospective purchaser had both acquisition financing and the monies necessary to develop Freeport.

The Highgrove/Ryan draft proposal, meanwhile, also refers to receiving advice from Mr Babak on how to structure their arrangements with Hutchison Whampoa, the 50/50 joint venture partner with the GBPA’s affiliate, Port Group Ltd.

“We are advised by Hannes Babak that Hutchison Port Holdings are principally interested in enlarging their container port facilities, and investing in an automated system of container movement,” the draft letter for Mr Whittley to sign read.

“It has been explained to us that an agreement could be reached with Hutchison Port Holdings to divest their interest in all other joint venture operating companies in return for Highgrove/Ryan gifting the shareholding in...... that was previously owned by Port Group Ltd/Hutchison Port Holdings to Hutchison Port Holdings. We can quite understand why this might be an attractive proposition to Hutchison Port Holdings.”