The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is pushing for Mediterranean Shipping Company (MSC) and Hutchison Whampoa to sign a Memorandum of Understanding (MoU) this week, which some observers believe deals with the Grand Bahama Port Authority’s (GBPA) acquisition.

Sources familiar with the situation said the Christie administration’s discussions with the two Freeport Container Port partners clearly went beyond that facility’s pending $250 million expansion, given the involvement of the GBPA’s shareholders.

Prime Minister Perry Christie at the weekend referred to “intense” talks involving GBPA co-chair, Sarah St George, which many have interpreted as a sign that the Port Authority’s ownership is in play.

“If they were just dealing with the Container Port, why do they need the families,” one source, familiar with developments, told Tribune Business on condition of anonymity.

They added that the Government was looking for MSC and Hutchison Whampoa to sign an MoU, a development confirmed by other contacts, although they were unable to confirm the specific purpose.

“In essence, I’ve heard they’re out,” another contact said of the GBPA’s ownership families, the Haywards and St Georges. “The Government has taken a position, and it doesn’t involve them.

“I heard this was to get Hutchison and MSC to sign the MoU. MSC and Hutchison are going to be the owners coming in.”

The source added that some in the St George family, in particular, viewed the Government’s move as ‘nationalisation’ of the GBPA, and a move that could result in arbitration hearings and legal actions.

“This is what needs to happen,” they added. “It would be good for Freeport, but they’re going about it the wrong way. I think we’re going to have to see how this one plays out.”

Another source familiar with events added: “It may be akin to nationalisation, but the fact is the families have not lived up to their mandate. There’s been no new investor for 12 years. Real estate has collapsed, and the town is totally desolate.”

Tribune Business exclusively revealed last month that the Government had been urging MSC, the privately-owned shipping conglomerate, to make an offer to acquire the GBPA, Freeport’s quasi-governmental and regulatory authority.

While that offer was supposed to have been discussed at a GBPA Board meeting, Tribune Business understands that events may have played out differently.

It is thought the Government is seeking to conclude the details and terms with MSC at its Geneva headquarters first. If successful, its delegation will head to London and be joined by the Prime Minister and others in a bid to seal the deal.

This newspaper understands that both MSC and Hutchison Whampoa have indicated they will not invest further in Freeport until they have absolute certainty that its expiring tax incentives will be reinstated.

Still, the attraction of an MSC/Hutchison offer, and potential purchase, is that they would have no need for the GBPA’s quasi-governmental and regulatory powers, which could then be handed straight back to the Government in Nassau.

It is unclear, though, whether the Hawksbill Creek Agreement’s provisions that any changes must be supported by 80 per cent of licensees, and that a devolution of regulatory powers must be to a newly-formed ‘local authority’, will prevent this.

The Government has been using Freeport’s expiring investment incentives, coupled with the money it claims the GBPA owes to cover its annual ‘deficits’ in Freeport, as leverage to compel the Haywards and St Georges to sell.

Its Hawksbill Creek Agreement Review Committee has added to the pressure by recommending that, in return for renewing Freeport’s real property tax exemption and other tax breaks for 20 years, the GBPA shareholders exit within one year of the deal being sealed.

Tribune Business understands that the Government has invited the GBPA owners to respond in writing to the committee’s recommendations, and supply their alternatives. It is unclear whether this has occurred.

The families have also been ‘digging in’ and trying to resist the Government’s pressure for them to sell, although the Haywards are thought more amenable to an exit than the St Georges.

The Prime Minister, too, has repeatedly talked about the need for “new blood” at the GBPA, and new ownership with the capital, vision and management/execution capabilities necessary to develop Freeport.

And the Government is eager to make something happen quickly, with Mr Christie on Monday stating that he wanted the consultations over Freeport’s future to be completed by the time the 2016-2017 Budget is delivered at end-May.

MSC already has strong connections to Freeport, which is the location of its Bahamas head office and Container Port investment, as well as its proposed maritime training centre.

Its links to the Bahamas have also been strengthened considerably by its $100 million cruise private island, planned for Ocean Cay near Bimini, an investment that would further underpin the rationale for a Grand Lucayan deal.