• ‘Business as usual’ for $300m transformation
• Shipping giant mulls offer for 49% controller
• No change to berthing policy, fees if deal
By NEIL HARTNELL
Tribune Business Editor
Nassau Cruise Port’s $300m transformation will not be disrupted by a shipping giant’s interest in acquiring its controlling shareholder, its chief executive asserted yesterday, adding: “That train left the station a long time ago.”
Michael Maura told Tribune Business it was “business as usual” at Prince George Wharf from both an operational and construction perspective while Mediterranean Shipping Company (MSC) weighs up whether to make a formal offer to fully acquire Global Ports Holding, the holder of a 49 percent equity stake in the cruise port.
Global Ports Holding, which is majority-owned by Turkish businessman, Mehmet Kutman, its chairman, won the bidding process initiated by the former Minnis administration for the 25-year concession to redevelop and operate The Bahamas’ major cruise gateway that received more than 3.5m passengers per year pre-COVID.
The UK-listed company, the world’s largest cruise port developer/operator, ignited several concerns locally after it confirmed in a statement to the stock markets that MSC has made an approach to acquire 100 percent of the business. The latter, which already has numerous shipping and cruise interests in The Bahamas, now has until July 13, 2022, under the UK’s takeover code for public companies to make a formal bid to buy Global Ports Holding.
Several sources, speaking on condition of anonymity, said an MSC acquisition - if it succeeds - would result in the outcome that the Government (the Minnis administration) sought to avoid by selecting Global Ports Holding as the winning bidder. It rejected a rival offer for Prince George Wharf, which featured a consortium of cruise lines, precisely because it feared this would be akin to “the fox guarding the hen house”.
An MSC purchase would thus leave the Government with exactly the situation it did not want, where the cruise lines were both port developer and user, and with a much narrower ownership base than the consortium’s as well. Contacts also raised concerns whether a Nassau Cruise Port controlled by MSC would resort to discriminatory treatment against rival cruise lines through berthing prices and availability.
“I know it’s got every single last cruise line worried,” one contact said after news of MSC’s offer broke. “They are deathly afraid of what that means. What does that mean for the berthing arrangements of every other cruise line, namely Carnival, Royal Caribbean and Disney?
“I just think it’s inherently dangerous for them [MSC] to control Nassau because Nassau is the crown jewel of cruising in the Caribbean. If and when MSC takes over, it will not operate the way it does now.”
Mr Maura, though, shot down and dismissed such concerns yesterday. He revealed that berthing policies are set by the Government, not Nassau Cruise Port, with the latter just administering them. Pointing out that Nassau Cruise Port, not Global Ports Holding, is named as the counterparty in all agreements with the Government, he added that no sale or ownership change at the controlling investor will halt plans to complete the $300m redevelopment by the 2023 first quarter.
Affirming that he had not been involved in the talks between MSC and Global Ports Holding, Mr Maura said of the possible acquisition approach: “Does it surprise me? No. I say that from the standpoint that any entity operating in the cruise industry space or tourism space looking to expand and grow, to me it’s logical that Global Ports Holding will be one of the companies that might come across their radar.”
With the cruise industry continuing to rebound from COVID-19, and having been “growing at a phenomenal rate” prior to the pandemic, he added that investments in the sector remained attractive with a further 30 cruise ships valued at $750m or more scheduled to launch over the next five years to 2027.
Suggesting that other players besides MSC may be eyeing Global Ports Holding, Mr Maura added: “That said, Nassau Cruise Port as a concession for the cruise port here in New Providence. We are a going concern. Fifty-one percent of the company is owned by Bahamians. Whether something materialises or not, there is nothing to cause change at Nassau Cruise Port.
“We have contracts. We have construction contracts, and have raised the money. Nassau Cruise Port has raised the funds to complete the project. That’s not going to change. Nassau Cruise Port has a commitment to the Government of The Bahamas as well. It’s business as usual.”
Mr Maura said “there is language within the concession agreement that speaks in terms of a change of control” at Nassau Cruise Port, detailing what happens should Global Ports Holding change hands or seek to sell its interest. He did not give specifics, though, on what this details, and said it was premature given MSC has yet to make a formal offer or have it accepted.
The Government would have to approve any acquisition, and Global Ports Holding’s replacement by MSC. However, if the deal goes ahead and is approved in other markets, the pressure on The Bahamas to follow suit will be significant. Nassau Cruise Port’s other shareholders are the Bahamas Investment Fund, the fund that holds a collective 49 percent stake on behalf of Bahamian investors, and the 2 percent controlled by the Yes Foundation. It finances good causes.
“I would continue to re-emphasise and reiterate that Nassau Cruise Port is well on its way,” Mr Maura told Tribune Business of the cruise port’s redevelopment. “We will have completed all of the marine construction by the end of July, which is one-and-a-half months away, and we broke ground on the upland works in October last year. You can see the super structure coming out of the ground for the arrivals terminal and Junkanoo museum.
“We are well on the way, and nothing is going to stop the Nassau Cruise Port project. Whatever these discussions are, and wherever they may lead, it’s not going to change the plans for Nassau Cruise Port. The train left the station a long time ago for Nassau Cruise Port. We will be having a ground breaking in the 2023 first quarter and nothing is going to stop that.”
Mr Maura said all necessary civil engineering works have been completed, and construction supplies have either arrived or are on order. He disclosed that many of the buildings and facilities have been “pre-fabricated offshore outside The Bahamas” and are due to arrive via ship within the next two months. Cranes will then be used to lift them off the vessels and into position.
Dismissing any fears about changes in berthing policy, the Nassau Cruise Port chief added: “Again, the business of Nassau Cruise Port will continue as it has. The Government of The Bahamas has a berthing policy, and all cruise lines must abide by that berthing policy. Nassau Cruise Port is charged with the administration of the Government’s berthing policy.
“We have a concession agreement with the Government of The Bahamas as being Nassau Cruise Port. The port fees, the passenger facility charge and the port facility charge are written into the concession agreement. The port exists to facilitate economic growth for New Providence and The Bahamas. It does not exist to facilitate the profits of any individual cruise line.”
MSC’s existing Bahamas interests stem from its Ocean Cay private island, located near Bimini, and the fact it is one of the two main cargo shippers calling on Nassau Container Port at Arawak Cay. It is also Hutchison Ports’ partner in the Freeport Container Port.
The shipping giant has also invested heavily in its cruise business, especially expanding its terminal in Miami. Thus it is not hard to see why it is interested in Global Ports Holding and, by extension, Nassau because of its need for additional destinations. It also has the finances required because, unlike rivals solely focused on the cruise business, it was able to keep operating during COVID due to its cargo shipping interests.
Global Ports Holding, in its stock market statement, said: “The company confirms that, following expressions of interest made to Global Yatırım Holding A.Ş (Global Investments Holding, the company’s majority shareholder), the company received an approach regarding a potential cash offer for all of the shares in the company by SAS Shipping Agencies Services Sarl (SAS), a wholly-owned subsidiary of MSC Mediterranean Shipping Company Holdings.
“Discussions are ongoing. These deliberations are at a preliminary stage and no decisions with respect to an offer have been made. There can be no certainty that an offer might ultimately be made for the company nor as to the terms on which any offer might be made.” MSC and its SAS affiliate now have until July 13, 2022, to make a formal offer or walk away.