The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Nassau Container Port is projecting that it will generate $5.8 million in ‘top-line’ revenues for the Government in the year to end-June 2014, with the company having slashed its annual financing costs by $500,000.

Dion Bethel, Arawak Port Development Company’s (APD) chief financial officer, told Tribune Business that the BISX-listed port operator is forecasting the Government will earn $2.7 million from its rent and container landing fee payments.

Apart from a $350,000 Business Licence fee, with its Gladstone Road freight terminal classified as a commercial lease, Mr Bethel said APD is also due to contribute $1.1 million in real property tax payments to the Government in its 2013-2014 financial year.

“When you add all those amounts up, that equates to $5.8 million to the Government before any dividends are paid,” Mr Bethel told Tribune Business, referring to the 40 per cent equity stake the Government holds in APD. “The Public Treasury are beneficiaries on two ends.”

Completing APD’s tax/fee payments are the Public Treasury’s earnings relating to the port’s bulk aggregate facilities.

“For every tonne that goes on the street, there is $3 in Road Tax that goes to the Public Treasury,” Mr Bethel added.

“We estimate that amount that feeds into the $5.8 million is about $1.65 million. Some 550 tonnes goes through the bulk aggregate tax, and this is all new income.”

Mr Bethel told Tribune Business that, had APD extended last year’s preference share issue, he was “confident” the port operator would have raised enough capital to take out its entire $41 million Royal Bank of Canada (RBC) bridging loan facility.

He added that the successful placement had cut APD’s financing costs by 1.75 percentage points over the long-term, saving $500,000 per year via a 5.5 per cent interest coupon.

“We went out for $20 million and finished with $36 million,” Mr Bethel said. “I’m certain that if we had left the offer open, we could have fully fulfilled the requirement for take out of the bridge loan without a doubt.

“What we were able to do in this market that’s never happened before, the attractive rate that we went out with, demonstrated that while there was noise out there, institutional investors had a tremendous amount of confidence in APD.

“Our financing costs will be reduced for the long-term. That equates to savings to the company by what we have on the bottom line and better returns to the shareholders.”

Mr Bethel argued that most investors viewed APD “as a blue chip stock” despite having started operations just two years ago.

Michael Maura, APD’s chief executive, told Tribune Business that for its 2013-2014 financial year to-date, the port’s container throughput volumes were up 5.5 per cent over the prior year. Some 135,000 “round trip” twenty-foot equipment (TEU) units were handled by the Nassau Container Port annually.

He added that, while APD had previously projected a major spike in container volumes due to major developments such as Baha Mar, the Nassau Container Port was now forecasting a more gradual rise.

“What we’ve seen from an operations perspective, and this is a good thing, is that we’ve seen more of a levelling off in volumes,” Mr Maura said.

“We expect Baha Mar volumes to take place over a long time, as opposed to a massive spike in three-four short months. We can manage resources more effectively.

“I think that what you’re going to find with major projects, like Baha Mar and Albany, is that those volumes will be trending up but at a very moderate rate. I think you’re going to see those volumes over the whole year; the next fiscal period.”

Mr Bethel said APD’s financial performance for its 2014 financial year-to-date was flat to “slightly ahead” of the company’s budgeted expectations.

“We may be a little short on volumes in certain areas, but we’ve been able to manage costs very well,” he added. “Shortfalls in certain revenue streams, we’ve been able to compensate for that with savings achieved in other areas.

“At this stage, and we’re likely to be pretty cautious, we’re running on budget through to the third quarter, and we would suspect we will maintain that for the rest of the year, notwithstanding any surprises.”

Mr Maura added that APD had got past the “hurdle” of its transition from construction/development to operations management, and was now busy refining its processes and systems.

He emphasized that prior to APD, the shipping industry in the Bahamas was “controlled by a select few”, with four “major players dominating container shipping prior to 2010. Alongside the founding 20-strong industry shareholders, with their collective 40 per cent stake, the Government now has an equal equity interest, with the public owning the remaining 20 per cent.

“There has been a tremendous shift for the positive. People are failing to recognize what existed prior to that,” Mr Maura said.