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'Significant' Bahamian Cruise Port Ownership

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is seeking "significant Bahamian ownership" in Nassau's new cruise port operator, which will have "a 25-year concession" to manage, develop and maintain the facility.

Bidders have until Friday, December 7, to submit their offers after the Government on Friday formally launched its search for a Prince George Wharf manager who will act as "a transformative catalyst" to spark downtown Nassau's redevelopment.

Dionisio D'Aguilar, minister of tourism and aviation, told Tribune Business that the Government would prefer bids to have "majority Bahamian ownership", although this not a mandatory requirement.

He added that the Minnis administration was seeking a similar model to BISX-listed Arawak Port Development Company (APD), the Arawak Cay port operator, where "the average citizen" - meaning small retail investors - have an opportunity to participate in the ownership of key Bahamian infrastructure assets.

"This FNM government has three main objectives," Mr D'Aguilar said of the cruise port Request for Proposal (RFP). "One is to allow for improved operation of the port, much in the same way as Lynden Pindling International Airport (LPIA) was run, creating a focused management structure that focuses on the business of running the port.

"I don't think we've brought sufficient focus to that. The second objective is to bring significant investment to the port, and third is to allow significant Bahamian ownership in the port - the average citizen - in much the same way Bahamians own 60 percent of APD."

That 60 percent is split 40/20 between the local shipping industry and 11,000 Bahamian private shareholders, respectively, with the Government holding the 40 percent equity balance.

Mr D'Aguilar said Bahamian equity ownership of Nassau's proposed cruise port operator is "not a stipulation" imposed on bidders, but the Government "wants to know what you propose for Bahamian participation.

"We would like it to be majority Bahamian-owned," he told Tribune Business, "but will see what the options are and what people come back with. Anybody is allowed to bid."

The 11-page RFP, a copy of which has been seen by this newspaper, addresses the local ownership question thus: "Meaningful regard must be given to Bahamian ownership in the Nassau cruise port, and the role of local vendors and taxi and tour operators."

"Bahamian ownership" accounts for 30 of the 100 marks that bidders, who pass the Government's "technical qualifications", can obtain when their proposals are assessed by the Government's evaluation committee.

Potential bidders are understood to be particularly mindful of the Bahamian ownership issue. Tribune Business understands that local investment banks, including RoyalFidelity and Providence Advisors, are already offering themselves as arrangers of local financing and ownership to groups mulling whether to bid.

And CFAL (formerly Colina Financial Advisors) has already partnered with APD and Global Ports Holding, the international cruise port manager, in submitting an "unsolicited proposal" to take over the Nassau cruise port's operations and upgrade via a $285.7m investment.

CFAL's role, according to their proposal, was to give Bahamian investors an opportunity to participate through the creation of the Bahamas Investment Fund (BIF), which will own a 49 percent stake in the project.

The minimum investment for Bahamians to participate in BIF was pegged at $1,000, but Global Ports Holding pledged to offer "up to $10m in financing" at BIF's launch - payable over 24 months - to allow small retail investors to participate.

Their consortium, though, already faces opposition from the 50-Bahamian strong Culture Village (Bahamas) group, which has submitted its own "unsolicited proposal" to the Government.

Mr D'Aguilar, meanwhile, told Tribune Business yesterday that greater investment was needed to both maintain Nassau's competitiveness as a cruise destination versus rival Caribbean ports and enable Prince George Wharf to receive the larger vessels currently in production.

"The port needs substantial investment to improve the quality of its offering," he told Tribune Business. "It has to take into consideration the bigger and far greater volume of ships coming on stream.

"With other Caribbean ports improving, if we're to remain front and centre as a cruise port destination we need to make the appropriate investment. We want this to be transformative, and a catalyst to start the rebirth of downtown Nassau and the redevelopment of Bay Street.

"The status quo is simply unacceptable, and we have to do something transformative. Hopefully, this turns out to be transformative. We want Bahamian ownership and a good number of Bahamian businesses to operate at the port, with better transportation facilities for taxis and tour companies," Mr D'Aguilar continued.

"We really need to think through how we lay it out so we can optimise and improve the passenger spend when they get here. Because we're not set up properly, people don't know about tours to go on, and people involved in that business are unable to market their wares in a proper manner at the port, creating more food and beverage options for Bahamian businesses."

Bidders must have a combination of equity and borrowed funds equal to $100m, according to the RFP, and have until November 30 to submit inquiries and request answers to their questions from the Government.

The bid document adds that the Government "reserves the right" to approve all fees and levies charged at the port by the new manager, which must submit its "vision for improvements and execution plan." Each group is allowed one tour of Prince George Wharf's facilities.

The Government is "interested in the redevelopment and privatisation of the operation of the cruise port terminal at Prince George Wharf", the RFP states, making clear that the physical real estate will remain in its ownership much like the Nassau Airport Development Company (NAD) model for LPIA.

"Currently the port of Nassau receives over 3.5m annual guests from a variety of cruise companies," the RFP states. "The Government has determined that it is beneficial to attract an experienced entity to invest and operate this important asset to bring needed capital investment to grow the port of Nassau with anticipated business.

"As part of the response to this RFP, bidders should present a comprehensive vision for the port of Nassau, its essential role within downtown Nassau, together with a proposed business plan and financial analysis (to be finalised by relevant bidder after selection) and indicating evidence of funding for a project of such importance."

The RFP describes The Bahamas as "one of the largest cruise destinations in the world, with multiple ports of call". It brands Nassau as "the premier destination", and "the busiest transit port in the Caribbean", with 1,150 annual ship calls and 3.5m cruise passengers disembarking

The Bahamas is said to have a "unique geographic location" due to a combination of its proximity to cruise line home ports in Miami, Port Everglades and Canaveral, and US maritime laws such as the Jones Act.

This requires foreign-flagged cruise vessels to call at an overseas port before they return to the US, this making The Bahamas virtually the only option on three and four-night cruises (Cuba's recent opening up excepted).

The Government's RFP confirms that 62 percent of all calls to the Bahamian capital feature the shorter three to four-day cruises, adding: "The Government will require the successful bidder to design, build, operate, finance and invest in the Nassau cruise port to provide for the success and growth of the industry in The Bahamas."

The Minnis administration wants the winning bidder to produce an expansion plan for Prince George Wharf that will increase the number of ships that dock, and enable the port to handle new and larger vessels going into future.

It is also seeking "a comprehensive upland redevelopment for the purpose of improving the guest experience, increase the tourism offering, improve traffic and circulation, engage the current merchants and vendors in the area in a more effective and proactive way to to increase traffic to their properties" and propose off-site areas that can complement the bidder's plans.

The successful bidder will be selected within 21 days of the December 7 closing, suggesting this could happen before 2018 year-end. This group will then enter "exclusive negotiations" with the Government to finalise the terms of their deal, although the RFP says the two best bidders could be asked to compete against each other in a further round.

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