The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

The Grand Bahama Chamber of Commerce’s president yesterday asserted that any potential Grand Bahama Port Authority (GBPA) purchaser must have “financial and intellectual capacity to act as a developer” and not just merely be able to acquire it.

Dillon Knowles told Tribune Business that the identity of any prospective GBPA buyer is less important than how the organisation operates and collaborates with the Government.

He said evaluation of potential owners or investors should focus on their ability to responsibly develop Freeport and work constructively with the Government, rather than simply functioning as a land sales agency.

"Regardless of who owns the Port Authority, there must be collaboration and clear rules of engagement between the Port Authority and the Government of the Bahamas,” said Mr Knowles.

“As I have often said, what matters most in the ownership of the Port Authority is that the entity - whoever it may be - has the financial and intellectual capacity to act as a developer, and not merely as a land sales agency. Any assessment of potential suitors should be made with this in mind."

Mr Knowles said a resolution to the arbitration which will determine the Government’s $357m dispute with the GBPA is significant for the local business community. He added that clear guidelines on how the Government and the GBPA will interact going forward should be established to support investment and community confidence.

"I think this issue is important to the community, whether they realise it or not. It is essential that there be a resolution in an open and transparent manner, as it could impact the viability of investment in Grand Bahama, particularly in Freeport,” said Mr Knowles.

“From the Chamber's perspective, our desire - regardless of how the matter is ultimately resolved - is for there to be certainty about the rule of law going forward, and clarity on how the Government and the Port Authority will interact with each other."

Keishla Adderley, the Prime Minister’s spokesman, revealed last week that a verdict to the GBPA arbitration could be announced “any time from now”.

Speaking at the Office of the Prime Minister’s weekly media briefing, she said the purpose of the arbitration was to address and remove obstacles that have been hindering development in Freeport. She added that the Government has not been formally involved in any discussions proposing an acquisition of the GBPA.

"As far as I am advised, the arbitration which was initiated could be resolved and a decision announced any time from now,” said Ms Adderley.

“I noticed that there is also, in the headlines, a discussion among a group of business persons who are proposing to offer an alternative to the Port. That is not something that this office has been formally in any sort of discussions about, but suffice it to say that the Government and the Prime Minister await that decision. 

“That arbitration, of course, was initiated in the interest of removing many of the deterrents to development in the city of Freeport and, by extension, the island of Grand Bahama, so the Prime Minister looks forward to a decision on that arbitration, which could come any time from now."

Tribune Business previously revealed  a Bahamian investor group is aiming to raise more than $400m in initial capital to finance the acquisition of the GBPA and its key economic assets.

Nicholas Rees, chairman and co-founder of Kanoo, the digital payments provider, has teamed with attorney John Bostwick and Paige Waugh, grand-daughter of Rupert Roberts, to form Born Free Capital as a “100 percent Bahamian-owned acquisition vehicle” that is seeking to purchase both the GBPA, and its quasi-governmental and regulatory powers, and the 50 percent Freeport Harbour Company and DevCO interests held by Port Group Ltd.

To finance its ambitious acquisition, Born Free Capital’s investment presentation reveals it is seeking an initial $402.8m in financing through a mix of debt and equity capital. The $42.8m worth of equity is broken down into $5m injected by its “founders’, with a further $37.8m to be raised from both “pre-seed” and “seed investors” in two separate rounds.

The $360m debt, described as “bridge” or “mezzanine” financing, will be raised through the issuance of two preference share classes that will pay interest returns to investors of 10 percent over a two-year period. At the end of that 24-month period, Born Free Capital is offering to either convert those preference shares to $441m worth of equity shares in itself or refinance them via long-term debt worth the same amount and paying 6.5 percent interest.

The presentation also reveals that Born Free Capital is planning to give Bahamian investors, as well as GBPA licensees, an equity ownership interest in the purchase by issuing 20m common shares, priced at $3.25 per share, in a $65m initial public offering (IPO) although a date and timeline for this was not provided.

Two tranches of four million shares, worth a collective $13m each, would be allocated to a fund created for GBPA licensees and the Government’s National Investment Fund, respectively, with the remaining 12m - valued at a collective $39m - would be available for purchase by Bahamian private investors.

Collectively, the Government, licensees and Bahamian investors would end up owning 5 percent of Born Free Capital’s equity, with the largest interests held by its founders (25 percent); and seed and converted preference share investors (30 percent and 35 percent) if all goes to plan.