The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

PRIME Minister Hubert Ingraham yesterday said he expects the Government to eventually sell its 40 per cent stake in Arawak Cay Port Development Company (APD), allowing the Nassau Container Port operator to become majority-owned by the Bahamian public company.

The Prime Minister's comments came during a press conference announcing that the Government will be providing a salary advance to give civil servants an opportunity to invest in APD's $10 million initial public offering (IPO).

Around 80 per cent of the one million shares, worth some $8 million, have already been subscribed for, but the 'bottom up' approach to allocating the offering's proceeds means those who invest by January 31 deadline are guaranteed the $500 minimum subscription.

While some have raised concerns over whether APD's Board would contain independent, non-executive directors charged with safeguarding the 20 per cent equity interest held by the Bahamian public, Mr Ingraham said this was of the utmost importance to the Government.

He said: "There's going to be a shareholders meeting and a decision will be made. It is my expectation that, eventually, the Port company will be a publicly-owned majority company; that eventually the Government of the Bahamas will own no share in the port. So the Government will [then] have no directors and the rest of it.

"I expect that in the coming years we will transfer to National Insurance, as an example, 5 to 10 per cent of our shares to hold on behalf of all the contributors to NIB in the country. I think the public is able to take comfort and be confident that the interest of the public is always in utmost in the minds of the Government."

The Government and private sector each invested $20 million into the Arawak Cay Port. Once the IPO is completed, the Government and private sector will each own a 40 per cent stake, with the public holding 20 per cent.

A $40 million private placement, scheduled for next year, is designed to replace the original line of Royal Bank of Canada credit financing taken out for the construction phase.

APD and its financial advisers/placement agents, CFAL and Providence Advisors, had initially hoped to launch the IPO in late September/early October, but discussions between the Government and private sector on how to structure the IPO had put it back to a December launch.

Mr Ingraham announced that civil servants will now have a better opportunity to take advantage of what he praised as a "once in a lifetime deal"

He said: "The Government advances will be for a period of 12 months, and so you will have salary deductions taken from your salary every month over a 12-month period. The Government is not charging any interest. Even though the Government is paying interest on this money, you will be getting an interest free loan for 12 months."

Shares are presently valued at $10, and there is a minimum share subscription of 50 shares or $500 dollars for the IPO, with additional shares to be purchased in increments of 25. The deadline for the IPO is January 31, and according to Prime Minister Ingraham, civil servants looking to capitalise on the salary advance should do so by January 24.

APD's chief executive, Mike Maura Jr, said that while as much as 80 per cent of the shares have already been spoken for, those still looking to capitalise on the offering need not be concerned.

"It's a bottoms up process, meaning the first 50 shares of each application will be honoured first," Mr Maura said.

"What will happen after January 31 is that the company will look at all subscriptions and start with the lowest common denominator, which is the 500 minimum, and make sure that if there are 8,000 applications that the 8,000 will at least get the minimum.

"Then what they will do is go to the next tier, which is the 25, and if all 8,000 have at least indicated they want that, they will then distribute that to the 8,000. So that's what the bottom up approach means. At the end of the day you could have 10,000 that took the minimum, 9,000 that took an additional 25 shares, 6,000 that may have asked for another 25 after that."

According to Mr Maura as there could be many as 20,000 shareholders at the end of the IPO.

Mr Ingraham, meanwhile, touted the APD IPO as a continuation of his government's efforts to spread the wealth and equity ownership of Bahamian companies as widely as possible, creating a share-owning democracy.

"During our first term in office we made 49 per cent of the shares of the Bank of the Bahamas available to the Bahamian public," the Prime Minister said.

"Today more than several thousand Bahamians own shares in the Bank of the Bahamas. The Bank is now owned 24.04 per cent Government; 27.78 per cent by NIB and 48.18 per cent by institutional investors and the general public. The shares, originally sold for $2.50, are now valued at more than $6.24 per share. At their high point they were valued at more than $9.

"Secondly, when the funding for the second Paradise Island Bridge was done through the issuance of Treasury Bonds, some 1,429 Bahamians invested in these long-term investment bonds. They have proven to be some of the better investment opportunities for many citizens with moderate and higher incomes.

"Thirdly, upon the introduction of cable television services by the Government, another opportunity was provided to ensure that Bahamians were afforded opportunities to acquire shares in what was certain to become a profitable company. Shares in Cable Bahamas were therefore made available to Bahamian citizens at a cost of $1 per share. Today, shares in Cable Bahamas trade at $8.38."

He also pointed to the Government's move to make Heineken's buyout of Commonwealth Brewery conditional on making 25 per cent of the equity shares available to Bahamians via an IPO. Some 3,000 Bahamians now own shares.