0

Keep Freeport out of a 'political cess pool'

photo

Frederick McAlpine

• Gov't 'and its cronies' opposed as GBPA purchasers

• PM spokesman declines comment on MSC interest

• Port buyer 'cannot come and just put it on their belt'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Major figures in last year's protest march to the Grand Bahama Port Authority (GBPA) have reiterated their opposition to its acquisition by the Government for fear Freeport will be dragged into "a political cess pool".

Both Rev Frederick McAlpine, the former Pineridge MP, and businessman Darren Cooper, told this newspaper they remain resolutely opposed to a Nassau takeover amid growing suggestions that the Government is supporting Mediterranean Shipping Company (MSC) as a potential contender to purchase the GBPA from the Hayward and St George families.

The Prime Minister's spokesperson declined to comment when asked by Tribune Business whether the Government was backing MSC as a potential GBPA purchaser, or seeking financial assistance from the global cargo shipping and cruise giant so it could effect the acquisition itself.

Separately, this newspaper was told that the Davis administration has elected to "keep silent and not talk about anything" further related to the GBPA, although contacts said negotiations between the two sides remain active as it bids to develop "the way forward" for Freeport and Grand Bahama and "get the best deal for the Bahamian people".

Mr Cooper, confirming that he, too, has heard talk of MSC's reputed interest in the GBPA, was joined by Mr McAlpine as both voiced misgivings over whether the shipping giant - as well as the Government - were the right fit to advance Freeport and make the city a 21st century version of what was originally envisaged under the Hawksbill Creek Agreement.

"I'm hearing the same thing as it relates to MSC," Mr Cooper said, as he called for both the Government and GBPA to disclose the identities of any confirmed bidders for the latter. "I am opposed to both parties…..

"I'm not in favour of the Government for many reasons. One reason is that the Government has not managed what they have now, and for us to put the GBPA in the hands of the Government of The Bahamas, it will only end up in another political cess pool or political game. We could be victimised depending on which government is in power.

"I do believe there are qualified persons out there that can purchase the GBPA, and who have real funding and vision. We don't want someone who buys it and just puts it on their belt. We want someone to come in with a vision, immediate intent and be able to take Grand Bahama where it needs to go. Grand Bahama is well-developed; we just need more investment to happen on the island," Mr Cooper added.

"There are some persons out there that can purchase the GBPA and take it where it needs to go. I would like for the Government or Port Authority to disclose to the people who may have expressed an interest in the GBPA so we would know it is not just MSC. I would like for them to be upfront with the people and transparent, and let us know who may have bid on and expressed interest in the GBPA."

Mr McAlpine, acknowledging that he also continues to hear the talk swirling around the GBPA, told this newspaper: "I'm not sure MSC would be my first choice. I am also opposed to the Government being involved with the purchase of the GBPA. That's always been my stance. I am also opposed to any cronies of the Government purchasing the GBPA.

"If you want to see how the Government will run the GBPA, look at how it operates the eastern and western parts of the island of Grand Bahama, and that will tell you exactly how the Government would run Freeport. I agree there needs to be an infusion of new vision or new private investors, or a cross-section of Bahamians might be interested in partnering with international investors.

"That would mean persons with a strong personal reputation and character in business, and finances, and who are acquainted with international investors and have a rapport with international investors. If a group like that wants to do something, we would welcome that. But if it's the Government, and its cronies, we're not interested."

Well-placed contacts, speaking on condition of anonymity, revealed that to-date there has been no official approach from MSC to either of the GBPA's shareholding families with regard to a formal offer to acquire Freeport's quasi-governmental authority. And several voiced doubts that the shipping giant would be interested despite possessing the necessary financial means via the billions of dollars in cash sitting on its balance sheet.

While the drumbeat about MSC's interest has grown louder in recent weeks and months, one contact said: "There's been no approach from MSC. It's been rumoured for more than a year." However, they conceded that "there's something going on" and added that there seemed to be "a lot of shenanigans" occurring in the background as it relates to the Government's relations with the GBPA and its present owners.

MSC already has extensive Bahamas interests, and especially in Grand Bahama. It has long been Hutchison Whampoa's partner in, and a prime user of, the Freeport Container Port for container storage and breakdown, and has recently teamed with Royal Caribbean and ITM Group on the $80m project to transform Freeport Harbour via the addition of new cruise ship berths and an enhanced tourist experience.

It has also transformed Ocean Cay, the man-made island off Bimini that was formerly used for aragonite and sand mining, into its private island cruise destination. "Government has been trying to get MSC into the picture for years," one source, speaking on condition of anonymity, said of the GBPA. They added, though, that the shipping giant is more likely to be interested in the harbour than acquiring a quasi-governmental authority.

However, other permutations could involve MSC providing the necessary financing for the Government to itself acquire the GBPA, or for the shipping giant to do it and then hand all quasi-governmental and regulatory powers back to Nassau. One advantage of involving MSC is its existing relationship with Hutchison Whampoa, which could be invaluable given that the latter is 50/50 partners with the Haywards and St Georges in vital assets such as the Grand Bahama Development Company and Freeport Harbour Company.

Mr McAlpine, meanwhile, said any potential GBPA purchaser must be "vetted properly" as The Bahamas must avoid "finding ourselves the same quagmire" as that involving Hutchison Whampoa and its lack of proactive investment/development in Grand Bahama.

"Whoever's considering purchasing, we need to make sure they have a vested interest in Grand Bahama and want to see the advancement of Grand Bahama," he told Tribune Business. "Their internal profits cannot be the bottom line for Grand Bahama. They have to have a vested interest in developing Grand Bahama, and invest in the interests of the people of Grand Bahama.

"That is what we have been lacking for the last 20 years or so. Everybody is just interested in their balance sheet and profits, but the people of Grand Bahama are going to hell.... We're at a crossroads because people have become very much frustrated at the lack of vision displayed by the Port Authority. They've done some things to prop themselves up, but to have investments that are touching the lives of the Bahamian people has been difficult and a failure for the past 20 years.

"There are many Grand Bahamians that have left this island and would love to come back home if there was something tangible to come back to. Unemployment is very high in Grand Bahama, and we're not seeing the Port Authority do the things they should be doing to maintain the roads." However, for all these faults, Mr McAlpine reiterated his vehement opposition to the Government taking over Freeport's management.

"I don't want the Government taking over my water or electricity. They cannot do it in Nassau properly, so how are they going to do it here?" he argued. "We are at a crossroads, and I really think that in order for us to progress there needs to be an infusion of a new set of shareholders and directors who have interest in this island and must be committed to help.

"When I look at MSC, that's fine, good and dandy but who in that group is going to represent Grand Bahama and Bahamians? I want someone connected to the island. I don't want another international company coming in and it's business as usual and bottom line profits, or somewhere to relax because it's a tax haven for them.

"We're at that juncture, and any decision now must be for the benefit of the people. We know it has to be balanced, but it has to be profitable for the people of Grand Bahama and profitable for investors seeking to buy the Port. The players have to be right, and we have to determine the right moves for the benefit of the people of Grand Bahama."

Mr Cooper, too, agreed that any GBPA purchaser "needs to be community orientated" and work with the people of Grand Bahama as well as bringing the necessary capital and investment contacts. He voiced particular concern that investment activity continues to bypass Freeport in favour of other Bahamian islands despite the tax breaks and other advantages the city can offer via the Hawksbill Creek Agreement.

"Getting new investors or an investor in at the Port Authority is definitely warranted," he added. "We as Grand Bahamians cannot understand why there's so many desired investment developments in other parts of The Bahamas but they're not looking at Freeport," he added. "I think a new investor will be able to bring some new ideas. New blood is key, and new vision is key."

Both Mr Cooper and Mr McAlpine suggested that one candidate potentially capable of doing what Freeport requires is Rupert Hayward, grandson of Sir Jack. The latter suggested he possesses "the spirit of Edward St George, and a rapport with the locals", while Mr Cooper said he was "interested in seeing the island take off".

Mr Hayward previously told Tribune Business he ha submitted “a new partnership” proposal that “can attract billions of dollars in investment [and] create thousands of jobs” for Freeport and the wider Grand Bahama to the Davis administration. He did not mention any names, but he has been heavily involved with the multi-party deal to develop a Six Senses resort at the 30-acre Barbary Beach site previously owned by Marriott.

That agreement features Weller Development, which is spearheading the largest US urban regeneration in Baltimore via the 235-acre Port Covington site, and Pegasus Capital Advisors, the $10.6bn private equity group focused on investing in sustainable projects and the only such group accredited as a fund manager by the Green Climate Fund.

Multiple Freeport-based sources have previously suggested this partnership could lead to bigger things beyond Six Senses, and there have been indications that Mr Hayward was working on a proposal with these entities to potentially buy-out the St George interest in the GBPA.

The Government has been examining whether change at the GBPA is best achieved through either a private buyer acquiring the Hayward and St George families’ ownership interests, the Government doing itself or the regulatory and quasi-governmental powers being devolved back to Nassau.

The Prime Minister, in a prepared statement earlier this year, said: "Grand Bahama over the many years has failed to live up to its true promise and potential. And we are are in discussions with the Port Authority for the purposes of identifying a path towards putting Grand Bahama on the right track to enable it to fulfill its full potential and promise."

The GBPA owners, in a 2016 Memorandum of Understanding (MoU) signed with the Christie administration, committed to masterplan the development of their landholdings and seek a buyer for their interests within specified timelines. However, none of these conditions appear to have been fulfilled.

The GBPA, while described by some as a ‘regulatory shell’, still possesses considerable powers that include business licensing, building code and environmental enforcement, city management, and the power to levy fees and service charges together with the operation of a free trade zone that offers multiple forms of tax relief to investors.

However, its income-earning assets have been transferred to Port Group Ltd. These include the 50 percent equity stakes in Grand Bahama Development Company (DevCO) and the Freeport Harbour Company, likely to be the two families’ most valuable assets, together with interests in multiple other companies such as Freeport Commercial & Industrial, another major landowner.

Should the Government seek to take over the GBPA’s regulatory powers, one source said it would amount to an “abrogation” of the Hawksbill Creek Agreement and raise multiple legal issues that would have to be addressed. Among these, they added, would be the provision that requires four-fifths (80 percent) of licensees to approve the devolution of quasi-governmental authority to a local government-type entity.

Comments

JokeyJack 11 months, 1 week ago

If govt thinks they can manage something - let them remove the restriction in the updated H.C. Agreement preventing other airports on the island, and use the old "missile base" as an airport in East End. Then show us what you can do to develop East End.
In 5 years if it still looks like Bain Town then we will still say no to govt take-over of Port.

0

Commenting has been disabled for this item.