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Salary Deduction Needed For $10m Cruise Ipo Loan

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Michael Maura

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamians wanting to access a $10m interest-free loan facility to finance investing in the Nassau Cruise Port can only do so if their employer “qualifies” for a salary deduction programme.

Michael Maura, Nassau Cruise Port’s chief executive, explained to Tribune Business that the imminent $25m initial public offering (IPO) will be structured such that those seeking to access the loan facility must demonstrate they have the capacity to repay via salary deductions through their employer.

Government employees already meet these requirements, but Mr Maura said the $10m loan facility was accessible to others if satisfactory salary deduction-related payment terms could be worked out with their employers.

“The Government employees are definitely included in the pool of qualified potential investors that could apply for a portion of the $10m interest-free loan,” the cruise port chief explained.

“It’s not limited to government employees, and companies that are willing and prepared to provide a salary deduction programme, and satisfy the Bahamas Investment Fund they can honour this commitment, there’s also a possibility they could be included as a qualified employer.”

Mr Maura moved to provide clarity after a note sent on Monday by Angelo Butler, senior analyst at CFAL, the cruise port’s financial advisers, seemed to imply that the $10m loan facility was solely accessible to government employees.

“The equity offering for the Nassau Cruise Port via the Bahamas Investment Fund is scheduled to take place shortly. CFAL will be raising $25m, which will be matched by Global Ports Holdings. Of this sum, $10m will be reserved for civil servants through a deferred payment programme,” he wrote.

Such salary deduction initiatives are not unheard of in The Bahamas as a means to encourage retail investors to participate in share offerings. The technique was used for Arawak Port Development Company’s (APD) offering in 2011, when the Government again advanced its employees the funds to buy shares that were repaid via salary deductions.

The Bahamas Investment Fund, which is the vehicle that will hold a collective 49 percent ownership stake in the Nassau Cruise Port, will be the entity issuing shares to Bahamians via the IPO. The interest-free loan is being provided by Global Holdings, the project’s controlling shareholder, which will also hold 49 percent of the equity. A foundation targeted at good causes will hold the remaining 2 percent.

With investors required to invest a minimum $1,000, Mr Maura said up to 10,000 individual Bahamian investors could potentially benefit from the interest-free loan facility. “The intent is to allow as many Bahamians to participate in this offering,” he added.

“In recognising these are difficult times, the $10m loan will be distributed among 10,000 Bahamians that have jobs and the capacity to invest in this through the Bahamas Investment Fund.”

Mr Butler’s e-mail confirmed: “The allocation will be on a bottom-up basis with each investor receiving their initial $1,000 investment prior to any additional subscriptions being accepted. The minimum investment for individuals and institutions will be $1,000 and $10,000, respectively with minimum increments of $500 and $2,500 respectively.”

These terms could be changed to accept smaller institutional investor contributions, he added. The Nassau Cruise Port IPO now only awaits Securities Commission approval of its offering document and prospectus, a process that is now in “its final stages”.

Mr Maura, meanwhile, told Tribune Business that Nassau Cruise Port is aiming to close on the remaining $55m in debt financing it needs “within the next 30 days”. This, and the IPO’s completion, will mean it closes the financing for Prince George Wharf’s $250m ($289m with financing costs) transformation before year-end 2021 and ahead of the project’s second quarter 2022 finish.

“We’re in the middle of securing that, which will be done in the next 30 days,” he confirmed of the outstanding bond financing. “We have been very fortunate that the US markets have blessed us with their financial support.

“We’re very fortunate that in the midst of the pandemic and difficult press the cruise industry has had, Nassau is extremely strategic to the sector, is blessed by geography and the project is one-of-a-kind at this point in time in the Caribbean and world. The stars kind of lined up for us.”

Mr Butler’s note added: “Nassau Cruise Port has raised $55m of the remaining $110m debt financing for the project, and is in discussion to conclude the final $55m with international investors. As such, we anticipate that by the end of 2021, Nassau Cruise Port will have completed all of its fundraising activities with an expected completion of the 2022 second quarter.”

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