Cruise Port Eyes $150m Bond Despite Shutdown


The proposed transformation of Nassau’s cruise port.


Tribune Business Editor


Nassau cruise port’s developer is aiming to raise up to $150m in bond financing next month to kick-start construction work amid the industry’s global shutdown.

Mehmet Kutman, chairman of Global Ports Holding, confirmed to analysts in a recent conference call that its $250m investment in transforming Prince George Wharf into a world-class destination will not be impacted by the fall-out from the COVID-19 crisis.

He revealed that the $130m worth of capital expenditure required at the Nassau Cruise Port over the next 12 months will be financed by May 2020’s bond issue, which he confidently predicted will be “oversubscribed” by Bahamian and international investors.

Tribune Business sources, speaking on condition of anonymity, subsequently disclosed that the developer is seeking to raise $150m from a combination of $100m in Bahamian dollar financing with the $50m balance denominated in US dollars. They added that the bonds will carry a 7.5-8 percent interest coupon, and have a 20-year term until maturity.

This newspaper understands that the bond issue’s details have yet to be finalised, with the issue’s start and closing dates yet to be firmed up other than the issue will take place some time in May. Full offering materials have yet to be released, with investor presentations also to come.

However, Michael Maura, Nassau Cruise Port Ltd’s chief executive, yesterday told Tribune Business that the industry shutdown has presented an opportunity to proceed with Prince George Wharf’s redevelopment - and the addition of more and larger cruise ship berths - at a faster pace than originally anticipated because they will not have to deal with thousands of passengers still using the facility.

Mr Kutman, in his conference call, said Global Ports Holding was now projecting April 2022 as the completion date for the Nassau redevelopment’s completion - a timeline that it hopes will coincide with the return of full cruise industry demand.

Mr Maura, who heads Global Ports’ Bahamian subsidiary, voiced optimism that The Bahamas - and Nassau - will “rebound faster than any other jurisdiction” for both stopover and cruise tourism, which was why it made sense to push forward with the port’s transformation.

He added that the project will “do wonders for downtown Nassau at a time when we need it”, and help ensure the Bahamian capital city attracts “a disproportionate share” of cruise ships compared to rival Caribbean destinations whenever the industry resumes voyages.

Mr Maura’s sentiments echoed those of Mr Kutman, who voiced optimism that the global cruise industry “will bounce back from this crisis stronger than before” with consumer demand “undiminished in the medium to long-term”.

However, Global Ports Holding’s “worst case scenario” when it comes to modelling COVID-19’s effects projects that “zero” passengers will arrive in The Bahamas or other Caribbean destinations for the rest of 2020. In this outcome, cruising in the region will only resume at “50 percent of budget” between January and April 2021.

Such a projection is unlikely to be greeted warmly by Bahamian hotels, Bay Street merchants, tour operators, taxi drivers, hair braiders, straw vendors and other businesses/self-employed persons who all rely on the cruise industry for their livelihood and have been among those must devastated by its shutdown.

And Mr Kutman also warned that “the earliest time we will see 2019 numbers come back will probably be 2023”. However, he said conversations with the chief executives of the world’s three largest cruise lines had produced a glimmer of hope in that two-thirds of passengers whose voyages had been cancelled were electing to re-book for future dates rather than take cash refunds.

The decision by Global Ports Holding and its Bahamian subsidiary to press ahead with Prince George Wharf and its redevelopment will be interpreted by some as a signal of confidence in both the project and the cruise industry’s long-term prospects despite the bleak immediate outlook and possibility the industry may not return until next year.

However, some Tribune Business sources have already questioned the timing of Nassau Cruise Port’s planned $150m bond given that COVID-19 uncertainty continues to upset volatile financial markets and impact investor sentiments.

Potential investors will also have to calculate how quickly cruise tourism recovers, since their interest and principal payments depend on passenger volumes crossing Prince George Wharf and paying a variety of user fees and passenger facility charges. The hope will be that the damage inflicted upon the industry is only for the short, and not the medium and long-term, as Mr Kutman said.

The Global Ports chairman, though, pledged that the company’s plans for Nassau under its 25-year concession with the Bahamian government will not be impacted by the COVID-19 crisis.

“In terms of our new ports, it’s important to note that the planned capital expenditure in Antigua and Nassau remains unaffected...,” Mr Kutman told analysts on the conference call. “In Nassau, the construction work has commenced as of last week [early to mid-April], and we don’t expect a completion date until April 2022.

“With that there will be capital expenditure over the next 12 months of up to $130m, which is being fully financed by a bond issuance in both the local and international markets, and demand will be much higher than the $130m to be issued by mid-May.

“Despite the current uncertainty, Nassau cruise port’s bond issuance in the local and international markets is on schedule and most probably will be oversubscribed.”

Mr Maura yesterday indicated that the bond’s details were still being finalised and should be released shortly. He said he was both “confident and excited” for the construction phase given the amount of planning, engineering and environmental work that has gone into it.

“We’re moving ahead,” he added. “We’ve secured the site and are active in our construction efforts. We’ve finalised our demand for the new terminal, and it’s going to be exciting, appealing and create demand.

“From a wider perspective, that will do wonders for downtown at a time when we need it. We’ve got these circumstances that the world is faced with right now, and we’re able to move faster than we otherwise would because we don’t have passengers. We’re going to everything we can to move ahead with this as fast as we can.”

Voicing optimism about the outlook for cruise tourism, Mr Maura added: “It’s The Bahamas, not just Nassau, but The Bahamas that is going to rebound faster than any other jurisdiction by air and sea. Nassau is going to come back stronger and better following this period.

“We will be first and have a disproportionate share of the ships in this region. Cruise costs are much less to come to Bahamas as an operator than they are sailing to other destinations in the south.”

Global Ports Holding, in its 2019 full-year financial statements, said construction work at Prince George Wharf will begin in earnest in June 2020. It added that it plans to convert $30m of a $50m bridging loan arranged by its Bahamian financial adviser, CFAL, into long-term financing on the same terms as the bond issue.

A final $40m bond, and $50m generated through operational cash flows, form the balance of the $250m redevelopment financing and will be raised between late 2021 and mid-2022.

“Despite the current uncertainty, Nassau Cruise Port’s bond issuance into the local and international markets remains on schedule and management are confident in the levels of demand. Global Ports Holding does not currently expect the Nassau operations to require any further direct cash contribution from Global Ports Holding Plc,” the company said.

Global Ports Holding’s financials reveal that the Nassau Cruise Port generated $2.5m in revenue, and $1.8m in earnings before interest, taxation, depreciation and amortisation (EBITDA), after it took over operations during the 2019 fourth quarter. EBITDA margin was said to be 72.5 percent.

Emre Sayin, Global Ports Holding’s chief executive, said the company was “almost done” with preparation work on the Nassau Cruise Port project. “This 4m passenger port will be transformed into a marquee port, into an incredible destination,” he pledged. “This project is going to be under construction in the next year, and be finished in 2022 according to our estimation.”

Mr Kutman added that Global Ports Holding was also working to help sent a shipment of medical face masks, gloves and other protective equipment to The Bahamas to help in the fight against COVID-19.


proudloudandfnm 5 months ago

Will the cruise industry survive this virus? Will it be different? Smaller? More boutique types? When will the world open up? When will people feel safe to travel?

Plenty questions.....


Well_mudda_take_sic 5 months ago

None of our ports or islands should be opened to the cruise ship companies until a tried and tested effective vaccine for covid-19 has been developed and all passengers and crew members on each cruise ship (without exception) are required to show satisfactory proof of inoculation before disembarking the ship and gaining entry to our country. And the same must apply to all visitors who arrive by air travel.


concerned799 5 months ago

The small amounts of spend per visitor from cruise ships in the Bahamas are not enough to run a modern Bahamas.

Maybe great for the cruise companies and a cruise port, but a poor deal for the Bahamas.

Hotel based visitors spend $1000 on island oer visitor. Probably now with higher class rooms available at BahaMar. I say we part ways with the cruise industry. Sooner the better, and bond investors can invest in Bahamian hotels.

We are not "stuck" with the cruise industry and it is our forever lot to make crumbs off this nations number one industry. We can ask it to leave.


truetruebahamian 5 months ago

We need to get rid of the cruise industry with mega ships built for mass creap passenger transport. Only ships to be allowed in Bahamian waters should be no larger than what we allowed in the 1970's and 1980's They ran quality tourists, did not open up their facilities in port and the town was alive with quality products to buy, entertain and consume. The straw market was a place of pride rather than what it is now - a market for cheap imported trash that has nothing to do with the Bahamas. The people in the market were innovative and polite, and Bahamians who radiated pride in their work Today they sell body and soul openly - these must go also.


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