The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Mediterranean Shipping Company (MSC) has made an offer to acquire the Grand Bahama Port Authority (GBPA), Tribune Business was told yesterday, amid concerns over “the brute force” being used to force its existing owners to sell.

Multiple sources familiar with the situation said the privately-owned shipping conglomerate, which has suddenly become something of a ‘best friend’ to the Christie administration, had been encouraged by the Government to make a GBPA bid.

Tribune Business understands that the offer was supposed to be discussed at a GBPA Board meeting last Wednesday and, although there were suggestions that it had come from its partner, Hutchison Whampoa, this newspaper was told that it came from MSC.

The latest move involving the GBPA ownership comes as its existing shareholders, the Hayward and St George families, are starting to dig in their heels against the Government’s pressure for them to exit.

Tribune Business was told that the two families “feel very poorly treated, and feel there’s a bit of strong arming going on” by Prime Minister Perry Christie and his government in a bid to force them out.

“The families are determined they won’t be forced out, but they will be,” one source familiar with the situation, and speaking on condition of anonymity, told Tribune Business.

“They’ve not got a chance to bring in their own buyer, or take this [MSC] offer. This offer is very good for Freeport. They don’t seem to realise the pressure they’re under.

“The Prime Minister is not going to back off; they have to go. The PM is not going to left MSC go away. The Prime Minister pushed Hutchison to buy, and they didn’t want to, and then they hit on the idea of getting someone else to make the offer.”

Another contact familiar with the GBPA situation added: “I had heard a few weeks ago that the Prime Minister was trying to get MSC to buy the Port Authority. He’s pushing them [the families] to sell to MSC.”

Government officials have privately been talking of an emerging “game changer” for Freeport that involves MSC, although they have not divulged any details.

The attraction of an MSC offer, and potential purchase, is that the company 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.

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.

From a commercial standpoint, an MSC acquisition of the GBPA would make sense in that its Freeport Container Port joint venture with Hutchison Whampoa would now be expanded to the Freeport Harbour Company (airport and harbour) and Grand Bahama Development Company (DevCo).

A 50 per cent equity interest in the Freeport Harbour Company would be especially valuable to MSC if, as predicted by Tribune Business, it has plans to make the city a ‘home port’ for its expanding cruise ship fleet.

This would also drive its potential acquisition of the Grand Lucayan resort property from Hutchison Whampoa, as MSC will need overnight hotel accommodation for the hundreds of cruise passengers that it would bring to Freeport.

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.

However, Fred Smith QC, the Callenders & Co attorney and partner, yesterday urged the Government to “back off” in its bid to force a GBPA sale.

While agreeing that the Hayward and St George families needed to exit, Mr Smith argued that this should be done on their own terms, rather than through “brute force” by the Government.

Mr Smith, the GBPA’s ex-external counsel, told Tribune Business: “I abhor the Government’s belligerent, strong arm tactics in trying to force the Port Authority shareholders to sell.

“I encourage the Port Authority shareholders to sell, because I think that an international or national investment company with the resources and capacity to professionally develop Freeport is in order.

“It is in the interests of Freeport and its licensees for new blood to be injected into the Port Authority by developers, but I condemn the brute force being exercised by the Government.”

Mr Smith, who was also the attorney for the St George estate, added that the Government’s pressure was “counter-productive” because of the potentially negative message it sent to other investors interested in the Bahamas.

He also warned that it threatened to “devalue” the GBPA’s worth, and that of Freeport.

“I urge the Government to back off and stop scaring the families,” Mr Smith said, “because it is a very poor reflection on the Bahamas.

“This kind of political srong-arming of investors is bad for business. It’s going to show people that the Bahamas has no respect for the rule of law.”

Mr Smith urged the Government to let the GBPA’s owners exit on their own terms, and at their own price, rather than seek to force a sale to an unwelcome purchaser.

“If they force this as some kind of fire sale, not only is the value of the Port undermined, but the value of the entire enterprise of Freeport and the licensees,” he told Tribune Business.