The Tribune

THE Arawak Port Development Company (APD) said the response from potential Family Island investors to its $10 million initial public offering (IPO) had been enthusiastic, after its principals undertake a nationwide roadshow to tout the offering's prospects. During the week tour, which included stops in Abaco, Exuma, Long Island, Governor's Harbour, Spanish Wells and Harbour Island, APD and its placement agents invited Bahamians to consider investing for the long-term. "We'd like for you to consider this as a long-term investment, not only for yourselves but for your kids and grandkids. We're seeing a lot of investor interest for children and grandchildren, so rather than us being labelled continuously as a society of consumers we should take this as an excellent opportunity to invest," Ken Kerr, chief executive of Providence Advisors, one of the IPO's placement agents, said. "When we compare this $500 minimum investment, which we would easily spend to go to Miami or somewhere in Florida, and which we might not be able to recover, this minimum $500 investment will over the long-term accrue to you positively through capital appreciation and dividend payments." APD shares, at $10 each, were made available on December 16 and will remain on sale until January 31. A minimum of 50 shares, at $500, must be purchased. The Bahamian public will ultimately own 20 per cent of APD, while Arawak Port Development and the Government will own 40 per cent each. Residents expressed enthusiasm for the project and the offering. "I think it's an excellent development. I'm delighted that we will now be able to own a part of our future," said Patrick Bethell of Abaco. "I'm definitely going to invest for my 16 year-old daughter," said Louise Bowe of Scrub Hill, Long Island. "It seems to be a wonderful opportunity" added Pastor Kendall Mckenzie of Exuma. And Abner Pinder of Spanish Wells said he had no reservations about the investment opportunity. "I personally am going to invest in it because it's a simple thing. All freight has to come in through one port and it has to make money," he said. APD has a 20-year exclusivity agreement with the Government to operate the only international freight port for New Providence. If, at any point, a future government decides to relocate the port, Mike Maura, APD's chief executive, said the Memorandum of Understanding (MOU) for the facility stipulates that government would have to repay shareholders of APD for any part of the investment that could not be moved to the new location, for example bulk heads and dredging. "This was all about financial viability. At the time that this project was undertaken, it was undertaken because you couldn't build a port for New Providence any cheaper than you could at Arawak Cay. If there is an alternative that is presented at some point down the road, that alternative will likely cost more money than we're spending today," Mr Maura said of the $83 million port. When asked to provide an example of possible returns on an investment in APD, Mr Kerr said to weigh the alternative of putting money in the bank versus investing in the port. At the end of three years, he said the projected dividend yield on a $5,000 investment was likely to be 12.92 per cent, compared to 4-5 per cent that the same money would earn in a bank. "So you would have made a spread of eight points over that holding period, and there is also the opportunity for that $10 to be worth more than $10 - maybe $11, 12, 13 or $15," Mr Kerr said. APD executives noted that financial projections contained in the prospectus were deliberately conservative, and did not take the Baha Mar project into account. Dion Bethell, APD's chief financial officer, said shareholders will receive their first dividend payment next year. "At the end of 2013, which would be June 30, 2013, we will issue a dividend to all of our shareholders, and that dividend will be approximately 40 per cent of our free cash flow," Mr Bethell said.