The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A senior official yesterday said the government "could sign tomorrow" with multiple offers as it seeks to raise $100m for the overhaul of four prominent Family Island airports.

Algernon Cargill, director of aviation, told Tribune Business that financing proposals were "already on the table" from both local and international investors prior to the government formally approaching the capital markets for funds.

Confirming that it had already sounded out local finance houses, RoyalFidelity Merchant Bank & Trust and CFAL, Mr Cargill said the "strong" interest shown in teaming with the government in a public-private partnership (PPP) to redevelop these airports represented a show of "confidence" in Bahamian tourism's product quality post-Dorian.

The four airports involved are Exuma's (Georgetown), North Eleuthera, Deadman's Cay in Long Island, and the "refurbishment" of Abaco's Leonard Thompson International Airport in Hurricane Dorian's aftermath. Mr Cargill said the first two account for the bulk of the financing needs, with North Eleuthera likely to prove most expensive due to the need to acquire commonage land for its expansion.

"We're talking about financing the airports through private-public partnerships," he told this newspaper, "and have multiple requests from international as well as local financiers to participate. We have offers from locals and internationally that we're actively considering.

"We're looking at a PPP to be able to provide financing for this purpose similar to the arrangement that exists between the government and the Nassau Airport Development Company (NAD). The actual response from the market has been very strong, and we continue to evaluate the proposals we have.

"We already have financing from the Inter-American Development Bank (IDB), local finance houses that want to participate with the government, CFAL and RoyalFidelity, and there's the international financiers that continue to approach us to provide financing and management support."

Mr Cargill said the government already possesses $35m in IDB financing to kick-start the necessary construction works, and revealed that it is seeking a further $100m to complete the funding for the four airports selected for priority attention.

"We're looking to raise $100m to finance these airports," he told Tribune Business. "The Exuma airport is ready for tender. That's $40m. The North Eleuthera airport will be a duplicate of Exuma, and will be more expensive.

"We have the Deadman's Cay airport in the design phase, that's $10m-$15m, and the refurbishment of the airport in Abaco post-Dorian will be between $5m-$8m."

The government leased the Lynden Pindling International Airport (LPIA) to NAD and its management company, Vantage, on a long-term deal while charging it with raising the capital to finance the facility's transformation. NAD was also given responsibility for managing its operations and ongoing maintenance, with revenues generated by passengers, airlines and retail/restaurant tenants servicing the interest on its debt.

The Minnis administration has made no secret of its desire to employ a similar model for the much-needed upgrades to the 28 Family Island airports given that the combined value of the required works likely exceeds $200m - a sum that the cash-strapped Public Treasury is unable to bear by itself.

Some observers suggested to Tribune Business yesterday that investor interest was likely to be lukewarm given that many Family Island airports did not attract sufficient passenger volumes to generate the desired return on investment financiers will be seeking. They even suggested there were doubts about whether the initial capital investment would be recovered.

Mr Cargill, though, dismissed such concerns. "We actually have offers on the table that the Government can sign if we wanted to. We have strong offers already and we can sign tomorrow if we want to," he told Tribune Business.

"We wanted to get the construction going and then reevaluate the offers. We've had IDB financing in place for quite a while so that will form a part of the preliminary support with private financing. We're actually in discussions now. We have international as well as local interest. These are people that have approached us without us having to go to market.

"We don't see any real concern, based on the attractiveness of the Bahamian tourism product, to raise the financing to get these airports off the ground."

Mr Cargill said investor interest could be attributed, at least in part, to the strength and resilience of the Bahamian tourism industry post-Dorian.

"This gives us confidence the product we're selling is right because we continue to attract local and international interest," he added. "We're very excited that there's such strong interest in The Bahamas' tourism product and providing support for the redevelopment of our airports. It gives the country extra confidence because there's such substantial demand for the tourism product even after Dorian."

Tribune Business sources suggested that the Government is proposing to create a special financing vehicle for raising the capital for the airport redevelopments, thereby keeping any debt and associated liabilities off an already-strained balance sheet that has been further stretched by Hurricane Dorian.

Mr Cargill declined to confirm this structure, merely saying: "We will work in partnership with the Ministry of Finance to determine the best way to move ahead. The department of aviation will lean on the expertise of the Ministry of Finance."