By NEIL HARTNELL
Tribune Business Editor
Just two bidders remain in the race to acquire Nassau Flight Services (NFS) ahead of a key presentation next Tuesday to the committee charged with selecting the best offer.
Algernon Cargill, pictured, director of aviation, confirmed yesterday to Tribune Business that one of the three bids received by the government had already been "eliminated" with the process "very near" to completing its evaluation of the remaining contenders.
Also affirming that Tribune Business's knowledge of next week's upcoming presentations was "accurate", Mr Cargill explained: "Part of the due diligence process is to meet with the bidders to discuss their proposal and ensure the committee fully understands the details.
"We eliminated one, so there are now two. We are meeting with them next week to review their proposals, and want to ensure we ask a few questions and get to know the principals who want to buy the company."
Mr Cargill declined to identify the two remaining bidders, but Tribune Business understands that Colin Ingraham and Robert Pantry, the former Royal Bank of Canada (RBC) and Scotiabank banker, are the principals involved in one of the groups. They are thought to be supported by RoyalFidelity Merchant Bank & Trust, which will raise the necessary financing.
The aviation director, meanwhile, said the Government-appointed evaluation committee had already assessed "in detail" the offers to acquire the state-owned airport ground handling services company.
"We've had several meetings already and are well advanced in our process," Mr Cargill added. "The process has been transparent also." The committee's recommendations on any winning bidder will still require Cabinet approval, and Mr Cargill said it retains the option to suggest that all offers be rejected.
Besides the aviation director, Tribune Business understands that the evaluation committee also includes former Central Bank governor, Wendy Craigg, who now chairs the Bahamas Civil Aviation Authority (BCAA) Board; Walter Wells; accountant Philip Stubbs; and Ryan Sands, an attorney with the Attorney General's Office.
Meanwhile, Dionisio D'Aguilar, minister of tourism and aviation, yesterday told Tribune Business he was not necessarily surprised that the Nassau Flight Services privatisation had attracted just three bidders.
"We had no idea what we were going to receive, so I can't say I was surprised," he said. "A lot of people express interest but when there's a bidding process and they have to put together a proposal, that separates the men from the kids. Maybe that process brings about organic attrition that allows only serious bidders to move forward."
Affirming that the Government remained committed to the privatisation, Mr D'Aguilar added: "Nassau Flight Services, as we've said on numerous occasions, is of the right size for a mid-size Bahamian company to absorb.
"It probably needs a fresh look, and it needs fresh investment. Ninety-nine percent of its revenues go on payroll, so that does not leave much room for capital upgrades. It needs a new business plan, approach and also investment in equipment and technology.
"There are those that think the Government should own everything. I think this [Nassau Flight Services] is probably best suited for a private sector entity to run and bring about the necessary investment in the business." Mr D'Aguilar, too, said the Government retained the option to reject all bids and "start all over again".
Nassau Flight Services' annual $8m revenues place it well within the range of the Bahamian investor groups targeted by the government. The Minnis administration has long made clear that it views the company as "low hanging fruit" when it comes to privatisation, outsourcing and getting the Government "out of business".
It also sees the privatisation as part of its drive to create more Bahamian entrepreneurs, diversify the economy and spread the wealth, hence its insistence that foreign bidders need not apply given that Nassau Flight Services' size makes it a prime candidate to remain in local hands.
The ground handling services provider currently requires annual taxpayer subsidies of $2m, while the privatisation tender document laid out relatively modest growth prospects. Revenues from its main ground handling business projected to grow at 2 percent per annum over the next decade.
And a downsizing of Nassau Flight Services' 244-strong workforce, featuring 166 full-time workers and 78 temporary staff, is almost inevitable given the need to better align costs with income. This, though, will not be easy given the presence of trade unions via the Airline, Airport and Allied Workers Union and an existing industrial agreement.
Nassau Flight Services' client base comprises British Airways, Air Canada, West Jet, Sunwing Airlines, InterCaribbean Airlines, Caribbean Airlines, COPA Airlines and Cubana Airlines at LPIA's international terminal, and Jet Blue, Southwest Airlines, United Airlines and Silver Airlines at the US terminal.
It also serves a host of charter and other operators, including Air France and Condor, while in Exuma it serves Air Canada and takes care of American Airlines and Air Cariabes in San Salvador.