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Hot Mix Offered To Raise $750m Loan

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A company part-owned by Brent Symonette's family offered to raise up to $750m in cheap British government loans to fund critical infrastructure works in The Bahamas.

Documents obtained by Tribune Business suggest that if Bahamas Hot Mix's proposal, made to both the Christie and Minnis administrations, had been accepted it would have given the company a lock over development projects it specialises in - roads, airport runways, and water and sewerage systems.

The first offer to raise massive "concessionary loans" through the UK government's export credit guarantee scheme was made in February 2017 just months before the general election. No progress appears to have been made with the Christie administration, and it was left for its successor to assess the offer.

Bahamas Hot Mix then rolled out the same financing model just eight months later as part of a joint venture proposal to take over the redevelopment of the Exuma and North Eleuthera airports via a "25-year concession" in partnership with fixed-based (FBO) operator, Odyssey Aviation.

Both K P Turnquest, deputy prime minister, and Dionisio D'Aguilar, minister of tourism and aviation, told Tribune Business that while the two Hot Mix proposals were received and discussed they were never acted upon by the Minnis administration.

While there is nothing wrong with either Bahamas Hot Mix (BHM) proposal, had the $750m financing offer, in particular, been accepted it would inevitably have sparked huge concern that one firm was going to establish a dominant position over much of The Bahamas' infrastructure development.

A BHM funding proposal to the Ministry of Finance, dated February 2017, details how the Bahamian company could use its UK subsidiary to obtain low-interest rate loans from UK Export Finance, the British government department that oversees the export credit guarantee financing.

It added that The Bahamas was "on cover for up to $750m", meaning that this nation could access funding up to this amount, with the document even suggesting that $1bn could be available.

"In the current economic climate, the British government through its Export Credit Guarantees Department (UK Export Finance) is actively financing projects undertaken by British contractors on extremely competitive terms," the proposal says.

"BHM, using its UK subsidiary BHM Construction International (UK) Ltd, can therefore offer concessional loans for projects using the UK Export Finance direct lending facility.

"This could be applied to various infrastructure projects such as Water & Sewerage, roads, airport runways, etc. The focus would typically be on Government’s urgent/priority projects." The areas identified are all those that Hot Mix specialises in.

Detailing the advantages of its offer, the Hot Mix proposal said lending costs would be further reduced by the absence of bank "middle men", while no repayments would be demanded of the Government until any projects were completed. It added that financing would cover up to 85 percent of a project's value, with the 15 percent balance "potentially" coming from the likes of the National Insurance Board (NIB).

While the document seen by Tribune Business does not explicitly say so, it is clear that Bahamas Hot Mix expected to be selected as the main contractor on any infrastructure projects financed by its proposal if it proved successful with both the Bahamian and UK governments.

Promising "certainty of price with no cost escalation and robust risk management", the proposal states: "BHM would expect to conclude a..... fixed price contract including the cost of consulting engineers and all variations. There would therefore be a complete transfer of risk to the contractor, which drives innovation and value engineering."

Suggesting that its scheme offered "substantially reduced cost" through loan interest rates as low as 0.93 percent, Bahamas Hot Mix set out how it would partner with the Bahamian government via a public-partnership (PPP) type arrangement and the steps required to access the British government financing.

Besides not having to draw on an already-strained Public Treasury to finance critical infrastructure projects, the company said its proposal would benefit the Government when it came to financing both airport and water infrastructure upgrades.

Mr Turnquest said he recalled both seeing the Bahamas Hot Mix proposal and meeting with the company over it, but told Tribune Business that the Government "hasn't acted upon it".

"I do seem to remember seeing something of that nature; a PPP-kind of arrangement," he replied, when questioned by this newspaper. "We haven't acted on it as far as I'm aware.

"I think we had a meeting, if I remember correctly, but nothing came of it. They were exploring the push for PPPs as we'd talked publicly about being interested in PPPs. That was the intent of it but I don't think we got anywhere with it."

Both the Christie and Minnis administrations identified PPPs as a potential solution to a Bahamian infrastructure deficit that Desmond Bannister, minister of works, previously told Tribune Business was "unquantifiable" and another obstacle to improved economic growth. This is especially since the cash-strapped Public Treasury lacks the means to finance such works.

PPPs involve the mobilisation of private capital and investors to fund projects intended to serve public needs, and Bahamas Hot Mix was far from the only company to respond to the Government's signals. The Christie administration approved PPPs with companies controlled by Sebas Bastian, the Island Luck chief, and Chester Cooper, the PLP deputy leader (new Road Traffic head office).

These, though, were halted by the Minnis administration as it sought to develop PPP policies and a regulatory framework to guide their development. One priority area identified by both governments is the $200m worth of upgrades required by Family Island airports, hence Bahamas Hot Mix's interest in the Exuma and North Eleuthera airports.

Its proposal, dated October 2017, says: "BHM Company Ltd, in partnership with Odyssey Aviation, offers to finance, design, build, maintain and operate, under a 25-year concession, the airports at George Town and North Eleuthera.

"BHM, using its UK subsidiary BHM Construction International (UK) Ltd, can offer concessional loans for projects using the UK Export Finance's direct lending facility in order to achieve this."

While Odyssey would take cover of airport management and operations, Bahamas Hot Mix was to deal with all necessary construction and physical upgrades to the runways and buildings.

"As a partnership, BHM and Odyssey have the experience to deliver a sustainable solution to upgrade the terminal building, apron and runway to achieve international standards of service and security," the proposal said. Odyssey already operates FBOs at LPIA, Exuma, San Salvador, Governor's Harbour and Rock Sound, as well as at two foreign airports.

Mr D'Aguilar told Tribune Business that the Bahamas Hot Mix/Odyssey proposal was one of multiple airport management/financing offers received by the Government, adding that he did not "want anyone to create mischief" and that there was "no underhandedness" involved.

"That offer was proffered and I rejected it out of hand because the ownership was not diverse enough," Mr D'Aguilar said of the two companies' joint venture. "They asked if they could submit one with a more diversified ownership structure, and did that in July/August 2018.

"I decided that it was just too complicated to do. There were a number of proposals on Exuma, a number of proposals on Eleuthera, and as we were building ideas and how it would be structured and how the financing works, I decided going with a small group was not the best way."

Mr D'Aguilar said the Bahamas Hot Mix/Odyssey proposal had been "put on the shelf" along with all offers, adding that the Government was "still trying to figure out" how to fund up to $200m worth of Family Island airport upgrades.

While "the Nassau Airport Development Company (NAD) model", involving the appointment of a management company and use of debt financing to fund necessary infrastructure upgrades. was being given serious consideration, Mr D'Aguilar said no final decision had been taken.

He added that air passenger volumes in the Family Islands would likely be insufficient to repay all such debt via a passenger facility charge (PFC), such as the one levied on LPIA users, and the Government may have to cover a certain amount through its own resources.

In the meantime, Mr D'Aguilar said the Government had decided to use available Inter-American Development Bank (IDB) financing to begin required improvements to Exuma's airport that could run into the $40-$45m "ball park".

Mr Symonette has repeatedly distanced himself from Hot Mix by saying that his children's trust, not himself, owns a minority stake in the business that he has suggested could be as little as 10 percent. Other Board directors include his brother, Craig Symonette, and Peter Andrews, the Bahamas Waste chairman, according to the company's website.

This has not stopped the former Cabinet minister and Hot Mix being placed at the centre of recent "conflict of interest" allegations relating to the award of several government-linked contracts to the company - claims that Mr Symonette has vehemently refuted.

These allegations, driven by the Government's political opponents, have centred on the award of a $20m contract for runway repairs at Lynden Pindling International Airport (LPIA) and two multi-million dollar Water & Sewerage infrastructure upgrades in the Family Islands.

Mr Symonette and his defenders have argued that the entire affair is nothing more than a politically-motivated witch-hunt, pointing out that Bahamas Hot Mix was evaluated as the best bidder for both the LPIA and Water & Sewerage contracts by foreign consultants.

The Water & Sewerage deals also had to be approved by the Caribbean Development Bank (CDB), which is financing the projects, adding a further level of protection against any improper influences in the bidding process.

Mr Symonette has such a vast array of business interests, many of which rely on government contracts or permits/approvals, that many believe it is virtually impossible for him to avoid "conflict of interest" finger-pointing by political opponents.

Companies such as Bahamas Hot Mix are often specialists in their field, and have few local rivals to match, thus enabling them to deliver quality projects that offer value for money for Bahamian taxpayers - something that is all-important given the Public Treasury's strained position.

However, perception is often just as important as reality, and social media postings indicate many Bahamians see the recent contract awards to Bahamas Hot Mix as part of a pattern where government deals are going to a select few and inhibiting the spread of wealth across society.

Comments

The_Oracle 2 months, 1 week ago

BHM getting $750 million in contracts would really cause the talking heads to spontaneously combust! However, could this be why Brent Resigned? Meanwhile infrastructural Decay is everywhere, and D'aguillar can't decide which spin cycle to use.

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Dawes 2 months, 1 week ago

Hmm a company goes to Government with an offer that may benefit both groups and due to one of the shareholders we should not even look into it. I don't care who owns what and if its owned all by one person, if the power would just stay on, the roads and other infrastructure be good and all at a reasonable cost. I would much prefer that then having what we have now where i pay an extortionate amount and its not even on all the time or there are plenty potholes, or family island airports are just shacks. Anyway the above isn't going to happen so i will look forward to more decay for the next few years.

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moncurcool 2 months, 1 week ago

You are so right.. Rather than look at the value of the proposal, we are looking at the skin colour, especially if not black. What BHM did, is what any sensible business would be doing to stay in business. Sad that we don't see how we have companies run by the black majority that rip us off. Anyone remember what happened to People Penny Savings Bank and recently Bank of the Bahamas? Sad BHM can't put forward a proposal for BPL and Bahamasair.

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BahamasForBahamians 2 months, 1 week ago

"I dOnT cArE wHo OwNs iT"

Thank you God you're not the one making the decision.

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Dawes 2 months, 1 week ago

Well the way we are doing it now has worked so well for all of us. I mean the roads have potholes and flood all the time, the airports on the Family islands are basic structures not fit for use and In Nassau you can't go a day without a power cut. But hey thats all good. The deal mentioned above was a good deal, with the loan bearing interest as low as 0.93%, which even if doubled would be 2-5% less then the normal rates Government pays. Over $750 million with a 2% difference is $15 million a year saved. but no we wouldn't want that.

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observer2 2 months, 1 week ago

“(IDB) financing to begin required improvements to Exuma's airport that could run into the $40-$45m "ball park".

“It’s the people’s time”. What a cruel joke the FNM is playing.

At $50 million per family airport upgrade Hot Mix quickly gets to the $750 million in contracts. No wonder he resign.

Add to this $650 million in loans for the incompetent BPL without a single management change, renewables or transparency out national debt will be well over $10 billion.

A couple ppl getting richer while we suffer.

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lobsta 2 months, 1 week ago

Massive suffering all around with better roads and airports.

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jus2cents 2 months, 1 week ago

Looks like the BHM proposal was a sound one, seems to makes sense to me! What’s wrong with using a UK low interest loan? Keeping the project owned by Bahamians makes sense too. (Plus the money stays HERE)

However, by getting loans from China, BOB or IDB etc., our Government always wants the taxpayer to suffer the costs. I guess those guys give out more "incentives" than BHM? So, are they the Few getting richer you are referring to?

Why can’t you see that, for any out-island to prosper, we need safe airports and we need good roads for the nation to be productive. Then there will be more economic growth benefiting all Bahamians, which then leads to less suffering for the poor.

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TheMadHatter 2 months, 1 week ago

Bahamians dont care about prosperity, dont mind potholes and D average education - so long as they have MAJORITY RULE. Dont worry 'bout dem Haitians coming now to teach them a good and proper "majority rule" lesson. And they cant call dem white.

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jus2cents 2 months, 1 week ago

Looks like the BHM proposal was a sound one, seems to makes sense to me! What’s wrong with using a UK low interest loan? Keeping the project owned by Bahamians makes sense too. (Plus the money stays HERE)

However, by getting loans from China, BOB or IDB etc., our Government always wants the taxpayer to suffer the costs. I guess those guys give out more "incentives" than BHM? So, are they the Few getting richer you are referring to?

Why can’t you see that, for any out-island to prosper, we need safe airports and we need good roads for the nation to be productive. Then there will be more economic growth benefiting all Bahamians, which then leads to less suffering for the poor.

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TalRussell 2 months, 1 week ago

Forgive me if some we see cynicism in this Minnis/Brent shell game with two couldn't possibly be more opposite recalls what was said during telephone conservation between Colony of Out Islands right honourable prime minister with his most influential substantive crown cabinet minsters, yes, no...
How wrongly were those who said comrade Brent, you're never going to make it in politics...
With each and every form of the revealing of some form closer to the truth of even more never before heard of by Colony of Out Island's populaces of even more widespread mindbogglingly amounts zillions millions dollars connecting dots either directly or indirectly to comrade Brent Symonette, or his 'children's' has old chaps sitting around table imperialists red shirts cabinet being all hot-mixed in sweat, yes, no... when comparing controversial Post Office's $70 million to $750 million even if compared new movie complex's ticket prices, the lesser sure hell made looks likes mere Saturday matinee movie pocket change....regardless, populaces needs know, which two man's memory recall is closer truth, yes, no...thinks just maybe there be's some actual Nixon kinds tapes recordings telephone conservation tucked away one desk draws ups in PMO... there's no need make this juicy stuff up...

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JackArawak 2 months, 1 week ago

If Brent were just interested in making money, he wouldn't be wasting his time with a government position. He is an MP because he cares about the country and we should be grateful that he has the dedication and resources to bring The Bahamas to a higher standard of living. Instead too many of us are cutting off our nose to spite our face. #sad

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TalRussell 2 months, 1 week ago

Comrade JackArwawk, not least tiny bit curiosity in your bones know...
a. How much, if anything, about the $750 million was made known Brent's cabinet colleagues, yes no...
b. How could any man's or woman's - regardless wealth or skin colour - even have been considered by a prime minister to sit in cabinet - much less be allowed remain seated around a cabinet table - all whilst $750 million Englishman's deal with PopulacesPublicPurse was in play, yes, no, not single ounce curiosity....

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BahamasForBahamians 2 months, 1 week ago

Brent commenting from his burner account LOL

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TalRussell 2 months, 1 week ago

My sources are saying Colony of Out Islands comrade prime minister, 'fired' Brent, before internal PMO leak made its way into media - knowing damn well what a difference news $750 million UK versus $70 million would upset even Brent's cabinet colleagues, yes, no....what little is now being shared with populaces is but internal red shirts party's desperation attempt at negative news housekeeping ahead 2022 general election... Frigging red shirts party blowing itself apart in real public time......

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Economist 2 months, 1 week ago

Good infrastructure goes a long way to a good economy.

We need to grow up.

Agreed that he should resign. Now accept the offer and fix the roads and airports.

We badly need both of those to boost our tourist product.

46 years of independence and we are still arguing like a bunch of children to the determent of our own good.

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ABOMINATION 2 months, 1 week ago

What do we expect, voters just go to the polls, cast their vote, then go home and never look back, just allowing some greedy Politicians, Card Blanche!!! to do what they want with the Peoples Money. Treating the country and the public treasury like they run their homes. Problem No. One....we have lost our Moral Compass, Values and Standards. If a Politician can lie and cheat on his Wife, or vice versa, how can you expect them to run a Country?! The time has come to put a Microscope under every single person that want to run...forget parties, we will elect Morally decent, sound, Men and Women/C.E.O. s, as suggested by someone on social media. The day we get rid of both Colors in this Country, i.e. FNM and PLP, the sooner we can get a fresh start. As for the Roads..If it was not for HAI, we would still be driving on worst roads, and all we the voters do is complain, instead of keeping an eye on where all the money has gone from Road Traffic! FNM where are the Forensic Audits that should have been done on all the public accounts? Do the Math, we have almost 600 thousand vehicles on this little island, drivers license plus car license over all these years....Its maddening to think that no one has been put before the courts! God knows the truth, and the people who have been stealing all their lives will have to answer to him!

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TalRussell 2 months, 1 week ago

Let's slowdown long enough smell rotten fish in what has now been confirmed by both comrades PM and his former now cabinet minister Brent but first - up until now. hasn't the official position taken by both the PM and Brent was that Brent never took part in any cabinet discussions leading to the contracting the new Post Office...... but begs serious question, why would he participate in discussions with his cabinet colleagues when he and the PM were discussing what can only be suspiciously looked at as side deal over the granting Post Office via telephone, yes, no..... how can this telephone conservation at bare minimum not be looked at as a most serious breach cabinet ethics... Wake up comrade"Brave", time you and your MP colleagues go to war against such questionable out the blue rotten fish telephone call instigated by the Colony of Out Islands PM, yes, no..

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JohnDoe 2 months, 1 week ago

Malcolm Strachan in his attempt to bait and switch the Brent Symonette issue said that we should not vilify Mr. Symonette because the white oligarchs have been replaced by black oligarchs that are equally corrupt and have also failed by the Bahamian people.

In his article he stated that “Sadly, the inaugural PLP government were responsible for transforming the culture of Bahamian politics into another kind of ugly – one where friends, family and lovers would benefit. Such a system is what has proliferated Bahamian society today and has been the most injurious to our existence as a people”. This begs the question, who exactly benefited before the inaugural PLP government. Bahamian politics where friends, family and lovers benefited did not start with the PLP Mr. Strachan, the only thing the PLP oligarchs did different was to spread the corrupt spoils to black Bahamians as well unlike the white oligarchs. Corruption and abuse of power whether by black or white oligarchs is wrong and the only losers have been the Bahamian people.

That brings me to this Bahamas Hot Mix issue. I have seen many posts above stating that if both parties benefited then it should be ok. Should that really be the only criteria a government should consider when making economic policy and decisions? If so then why criticize either government for giving contracts to friends, family and lovers because that criteria is almost always met when these contracts are being designed, DUUHH. The facts are that Brent put this proposal and others to the PLP without success, then decided to enter front line politics and once in power put forth the same proposal that would have given him a monopoly over all infrastructural work in the Bahamas to the FNM government, in which he was the most senior Cabinet Minister. Wow! Intent can certainly be inferred from these actions.

This behavior ranks right up there with anything the PLP has done and to the credit of the FNM this was even more than their stomach and political will could bear. It leaves a foul scent in the air, and it is not only morally wrong it is also bad economic policy and bad for democracy. It betrays one of the sacred obligations governments owe to the people it represents, which is to ensure that resources are allocated efficiently and fairly in a society based on some prevailing notion of social and economic justice.

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Well_mudda_take_sic 2 months, 1 week ago

Plenty white Bahamians popping out of the wood work now, including most of those behind the comments above. LMAO

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