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In The Bag - Global Has Port Funding

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Nassau Cruise Port.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau Cruise Port's top executive yesterday hailed the "monumental achievement" in beating its $130m capital raising target amid the economic turmoil created by the COVID-19 pandemic.

Michael Maura told Tribune Business that the Prince George Wharf developer's bond offering, which "exceeded" its fund-raising goal through being oversubscribed, had provided sufficient sufficient financing to "carry us" for 16 months of intensive capital upgrades to The Bahamas' main gateway.

He explained that this would include both demolition and marine works, the latter phase comprising construction of one new pier and extension of another, plus the reclamation of land that will be the site for the cruise port''s food and beverage, retail and entertainment attractions.

The $224m project's main contractor, Enka, is scheduled to be setting up on-site in June and starting to "drive steel piles" for the new and expanded cruise ship piers by September this year. Between those two dates, it will work on demolishing old, dilapidated structures on Prince George Wharf such as the old Customs warehouse.

Mr Maura, meanwhile, argued that the success of Nassau Cruise Port's funding drive had been made "more significant" by the non-participation of the National Insurance Board (NIB), a major player in previous Bahamian infrastructure project finance raising, which this time said it was unable to come in due to the focus on liquidating its overseas investments and meeting its COVID-19 obligations.

Confirming that no financial contribution from its parent, Global Ports Holding, had been required to cover any bond offering shortfall, he added that the cruise port's financial adviser and lead placement agent, CFAL, was working on a potential offering to accommodate small Bahamian investors who had not qualified to participate in the $130m raise because they were unable to meet the $50,000 minimum investment threshold.

Mr Maura said CFAL's president, Anthony Ferguson, was now exploring the possibility of a debt offering to small Bahamian retail investors that could be launched in August/September this year once regulatory approval was obtained.

He confirmed that Nassau Cruise Port still planned to raise the remainder of its financing in the 2021 first half. Around $36m of this is intended to come from around 20,000 Bahamian retail investors buying shares in The Bahamas Investment Fund, a mutual fund that will own 49 percent of the cruise port developer and operator.

"It wasn't an easy road but we made it nevertheless," Mr Maura told Tribune Business of the bond offering, which closed on Friday. "We come out of the offering with more than $130m; we exceeded it. I think it's a monumental achievement given our current circumstances, our current national circumstances and the world's circumstances.

"In light of the recent communication from the Central Bank in suspending the repatriation of dividends from foreign subsidiaries doing business in The Bahamas, in light of the uncertainty around tourism, with the borders still closed and the Emergency Powers environment, the fact we were able to raise over $130m is a fantastic achievement.

"The vast majority of people recognised the national significance this project brings, and means, to hundreds of jobs, tourism, the broader economy and downtown Nassau. That's what caused people to rally behind this project and make sure this happened."

Mr Maura said the cruise port had beaten its $130m goal despite the non-participation of NIB, which is seeking to liquidate its overseas US dollar investments and repatriate the proceeds in line with the Central Bank's request to help bolster the foreign exchange reserves.

"We did as all national infrastructure projects do, and approached NIB," he recalled. "NIB gave us an opportunity to make a presentation, but came back and said that unfortunately it was not the right time for them as they were divesting themselves of US investments and bringing the proceeds home to deal with their obligations under COVID-19.

"As a result of that they were unable to participate, which makes the accomplishment far more significant, as other projects like the airport benefited from a substantial investment by NIB and we were able to to it without that. They did express, they did indicate, that ours is the type of project they would normally be committed to, and when we come to market again they hope to be able to participate."

Demolition work is already underway at Prince George Wharf at the old Customs building, which Mr Maura revealed is having to be taken down carefully due to the presence of asbestos in the structure - just as there was in the Department's old facility at Arawak Cay.

He revealed that the Ministry of Works and the Bahamas Environment, Science and Technology Commission (BEST) had given the go-ahead for demolition work to proceed while Nassau Cruise Port awaited approval of its Environmental Impact Assessment (EIA) and management plan. This is expected to be received within weeks, if not days.

"The project is divided into three phases," Mr Maura confirmed. "The first phase is the demolition, and the second phase - the marine works - involves the construction of a new pier and extension of an existing pier. It also includes dredging and seabed reclamation that allows us to expand the food and beverage, retail and entertainment offering."

The Nassau Cruise Port chief said the $130m raised would take the project through these phases and into the third, and final, stage. "It carries us for another 16 months, and we'll be positioned to carry on," Mr Maura added.

"The other important part is that we were successful with this capital raise at a time when people are investing in an obvious mood to improve the downtown waterfront and improve the core tourism product. People will see works have been ongoing for 12 months."

He explained that the construction works progress would give small Bahamian retail investors the confidence to participate in The Bahamas Investment Fund's equity raising, which is scheduled to take place in March/April 2021. Bahamians will be given the chance to own part of the cruise port through the Fund, which will have a 49 percent ownership interest in the project.

Global Ports Holding's matching contribution will take total equity funding to $74.3m. This, combined with another $80m debt financing raise, will provide the funding for the "superstructure" phase three of the cruise port's transformation, with a new passenger arrivals building, Junkanoo Museum, and amphitheatre.

"By the end of June I'm advised that the project's contractor, Enka, will be setting up their trailers," Mr Maura said. "They have purchased the steel, and they anticipate they will be able to drive steel piles in September. They will use between June, when they set up their base camp, and then to complete the demolition of the old buildings that have to get taken down out there."

The Nassau Cruise Port chief said the "couple of hundred requests" from Bahamians who had wanted to participate in the $130m raise, either at a lower threshold or as a group, would not be forgotten. He added that CFAL was aiming to put together "a small retail investor offering" for around August/September 2020 once it received the necessary regulatory approval from the Securities Commission.

“During these unprecedented times,” Mr Maura continued, “this essential project will put food on the table for many Bahamians who didn’t know how they were going to feed their families in the weeks and months to come.”

A 2018 economic impact assessment conducted by KPMG concluded that the project would have a $300m impact on the Bahamian economy during the construction phase, and make a $15.7bn contribution over the 25-year concession period.

“From an industry perspective,” Mr. Maura added, “our project is critically important. Our success is a signal to our tourism partners that the Bahamian tourism industry, and specifically Bahamian cruise tourism, will continue to thrive.

"Moving forward on this project puts The Bahamas miles ahead of our competitors, who will be challenged to offer a product to rival our exceptional port and waterfront experience. With the support of our key stakeholders, this project will exponentially improve the circumstances of thousands of Bahamians.”

Comments

proudloudandfnm 1 year, 4 months ago

Meanwhile the cruise line owned GB Shipyard just laid everybody off....

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TalRussell 1 year, 4 months ago

Being there has never been an independent forensic audit performed as to the Shareholders structure nine years on the other side the Nassau Container Port aka Kelly (Trevor) Island - wouldn't it be smart to conduct one before jumping into another "Land reclamation" project, basically involving the same bunch preferreds. Nod once for yeah, Twice for no?

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thps 1 year, 4 months ago

Congrats, there is lots of liquidity and appetite for yield. My guess, pension funds swooped in and gobbled this up. Those who sat on loads of cash looking for returns filled in the blanks.

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