The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An outspoken QC yesterday pronounced himself “absolutely thrilled” to learn that the Grand Bahama Port Authority’s (GBPA) feuding owners seemed to have united and finally “divorced” themselves from ex-chairman, Hannes Babak.

Fred Smith QC, the Callenders & Co attorney and partner, expressed hope that the St George, Hayward and Bloom families had “finally seen the light”, and would now work to sell 100 per cent of GBPA and Port Group Ltd so these companies could “realise their true potential”.

Mr Smith was speaking after a joint press statement from the three families, sent to Tribune Business, disclosed that they no longer wanted Mr Babak and attorney, Andre Feldman, “involved in any way” with the late Sir Jack Hayward’s family trust.

It was Messrs Babak and Feldman’s decision to engineer the removal of two of the trust’s three trustees back in May, leaving a company they owned and controlled as the sole guardian for the Hayward family’s 50 per cent GBPA/Port Group stake, that appears to have provoked their downfall.

Yesterday’s press statement implied that Patty Bloom, the late Sir Jack’s companion, and her family have joined forces with the Hayward children and grandchildren to ensure Messrs Babak and Feldman no longer have any control or influence over the trust.

“Members of the Hayward, St George and Bloom families are united in predicting that the recent appointment of Judicial Trustees for the Sir Jack Hayward Family Trust will have a very positive impact on prospects for reaching a deal with prospective investors in the Port Authority and related entities,” the statement said.

“At an October hearing, the Supreme Court of the Bahamas ordered the removal of Prometheus Services Ltd as the trustee of the Hayward Family Trust and, in its place, appointed Judicial Trustees, Ryan Pinder and Paul Winder.

“The Hayward family initiated that action, which the Bloom family support, and both families have made clear that they do not wish Messrs Babak and Feldman - the ultimate joint owners of Prometheus - to be in any way involved in their affairs or with the trust.”

Tribune Business sources close to the situation have been suggesting for some weeks that Ms Bloom and her family had effectively ‘fired’ Mr Babak and Mr Feldman, and Prometheus, and disassociated themselves from the duo.

Mr Babak, when contacted for comment yesterday, told Tribune Business: “If everybody finally agrees to sell the GBPA and Port Group Ltd, I applaud that highly, because it would be the best thing for Freeport and for those companies to find new owners, as was agreed in the 2010 Settlement Agreement between Sir Jack and the St Georges.”

He declined to comment further, and gave no indication that he was aware of the Hayward-Bloom camp’s decision to exclude himself, Mr Feldman and Prometheus from any further role in safeguarding/controlling the late Sir Jack’s trust.

Mr Feldman, too, declined to comment when contacted by this newspaper.

The three families’ statement warned that if Prometheus {Mr Babak and Mr Feldman] sought to contest its removal as trustee, then further legal battles would start in the Supreme Court in April 2016.

“Should Prometheus persist, contrary to the wishes of the beneficiaries, to continue to contest its removal, then another court hearing would likely be held in April of next year. Until then, however, the Judicial Trustees are to remain in place,” the families added.

“The St George family joins with the Bloom and Hayward family members in welcoming this change as a positive development, not only for the Port Authority but for all of Freeport.

“The three families believe that the decision will help clear the way for more productive discussions with potential buyers and investors who recognise the tremendous opportunities in Freeport, and are willing to commit the funding and expertise needed to make those opportunities a reality.”

The statement is understood to have been approved by all three families, plus the Judicial Trustees.

Its timing is also interesting, for it comes just as Prime Minister Perry Christie and a host of Cabinet ministers and government officials are meeting with the GBPA’s main investment partner, Hutchison Whampoa, in London.

Although the official line is that the Government will be discussing with Hutchison Whampoa how it plans to handle Freeport’s expiring Business Licence and real property tax breaks, which expire in February 2016, Tribune Business understands Mr Christie also wants to re-ignite the Hong Kong-based conglomerate’s interest in acquiring the GBPA.

The families’ statement suggesting that Mr Babak and Mr Feldman have been removed from all future involvement with the Hayward trust, thereby creating certainty over who to deal with on a potential GBPA sale, could not have come at a better time from the Government’s perspective.

However, sources close to Prometheus yesterday suggested to Tribune Business that the April 2016 hearing would indeed take place, and that it will ‘not go quietly into the night’.

Confirming that yesterday’s press statement, and Tribune Business’s contact, was the first time anyone associated with Prometheus had heard its continued involvement as trustee was not wanted, one source questioned why no one in the Hayward and Bloom families had written to inform it of this decision.

The source, speaking on condition of anonymity because they were not authorised to speak publicly, said April 2016 had been fixed as the hearing date where all parties were to be present because the Hayward side had realised the Blooms needed to be given an opportunity to voice their case.

The initial November 19-20 hearing date was thus pushed back to allow the three current Hayward trust beneficiaries - Ms Bloom, her daughter, Amy Clough, and the late Sir Jack’s butler. Trevor Bethel - time to prepare their evidence and case.

The Prometheus-connected source confirmed that the April hearing would take place, said the former trustee needed to recover “hundreds of thousands of dollars” in costs incurred in preparing to challenge its removal via the October 5 court Order.

“It didn’t have to come to this,” the source said. “It didn’t have to come to anywhere near this. They [the Haywards] started this, and will have to finish it.”

Messrs Babak and Feldman had justified their removal of the other two Hayward trust trustees, Richard DeVries and Ian Barry, on the grounds that they were “negotiating silly deals” to sell the GBPA and Port Group Ltd to the multi-trillion dollar asset manager, BlackRock.

They argued that the potential deal being negotiated by the two trustees was not in the interests of any Hayward trust beneficiary - neither the Hayward nor the Bloom camps - because it severely undervalued the GBPA and its affiliates, while the agreement’s structure was also unfavourable.

Messrs Babak and Feldman thus flew to the UK to meet with the Hayward trust’s protector, Keith Griffiths, and - despite admitting that he looked like “skin and bone” - asserted that the latter’s mental faculties were fine as they persuaded him to both remove Mr DeVries and Mr Barry, then appoint themselves as co-protectors for the Hayward trust.

The latter step further strengthened their hold on, and control of, the Hayward trust and its GBPA holdings, although the duo were adamant that their actions did not represent any self-dealing - despite leaving themselves as sole trustee.

Prominent Freeport figures, though, pronounced themselves elated at Messrs Babak and Feldman’s removal, arguing that this had eliminated a major obstacle to the GBPA’s sale and Freeport’s future development.

“I am absolutely thrilled that the St George and Hayward-Bloom families have finally seen the light, and are distancing and divorcing themselves from Babak,” Mr Smith told Tribune Business.

“The implications for Freeport and the Port Authority are that, finally, the shareholders are putting up a united front against what has been a negative element in Freeport’s investment environment since the death of Edward St George.

“Hopefully, they will be working together to find investors, and divest themselves completely or any shareholdings in the Port Group of Companies, so these companies can fulfill their true potential,” Mr Smith added.

He emphasised that Freeport was not an “ancestral, medieval business environment” where ownership of the GBPA could merely be inherited.

“People’s futures are at stake here, and what could be the biggest economy in the Bahamas, the industrial city of Freeport, is lagging because we don’t have a professional developer, Bahamian or foreign, involved,” Mr Smith told Tribune Business.

He questioned why Mr Babak was still “orbiting in Freeport’s economic galaxy”, adding: “He needs to get off centre stage.”

Another key Freeport professional, speaking on condition of anonymity, said yesterday’s announcement meant Messrs Babak and Feldman would no longer hold any influence over Freeport and the GBPA’s future.

“The main thing for Freeport is that Babak is no longer in charge of selling the Hayward interests,” the source said. “Unless it was somebody he wanted and brought to the table, nothing was going to happen. It’s all wonderful from that point of view.”

It is not all bad news for Mr Babak, though, as the Settlement Agreement that ended the litigation between the Hayward and St George families in 2010 guaranteed that he will receive the first $20 million net proceeds from any GBPA sale - $10 million coming from each family. That has not changed.