The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A proposal has been made for the government to acquire Grand Bahama International Airport by paying its existing owners $1 each then assume responsibility for its multi-million dollar rebuilding.

Well-placed Tribune Business sources, speaking on condition of anonymity, yesterday said confirmation of an agreement with Hutchison Whampoa and the Grand Bahama Port Authority (GBPA) could come as early as next week amid increasing concern over the the vital infrastructure asset's fate.

Dionisio D'Aguilar, minister of tourism and aviation, declined to comment on the "$1 each" proposal when contacted last night by Tribune Business. He confirmed, though, that the government is "negotiating a deal" with the airport's existing ownership duo although nothing had been agreed yet.

"The government is exploring its options," the minister reaffirmed. "Offers are made, and they're received, considered and responded to. There's nothing signed, there's no deal yet, but the process continues.

"When you have the ink on the paper is when you talk about the deal. It's not healthy to talk about the negotiating process in the public domain until there's a deal. Do we have a deal? No. Are we negotiating a deal? Yes. When do we expect a deal to be done? In the quickest possible time."

One source familiar with developments, speaking to this newspaper on condition of anonymity, said the Minnis administration had been left with little choice but to act rapidly given that the airport's post-Dorian state threatened to sink the entire Freeport and Grand Bahama economy.

"I'm told the Government have made a decision on the airport," they said. "I expect they're going to make a formal announcement on it. There's an offer where they would get it for $1 from both sides."

Tribune Business was told that the ITM Group/Royal Caribbean joint venture's demand for a government guarantee, or commitment, that Grand Bahama International Airport will be restored to internationally-accepted standards by the time its $275m investment opens had also forced the Minnis administration's hand.

The source suggested the pressure from the Grand Lucayan's prospective purchaser had been key, adding: "The most important thing is to get the hotel built. Thank God for that. Without the airport and Royal Caribbean we would be a village up here. We could have been dead in the water, but now we might have a chance."

Transactions where the purchaser pays a token sum and agrees to assume all the liabilities associated with an asset are not uncommon in the corporate world. They can often facilitate the exit of an eager seller, in this case the GBPA and Hutchison Whampoa, with the Government taking over responsibility for a reconstruction effort that has previously been estimated at anywhere between $20-$40m.

One unknown is the fate of any Dorian-related insurance claim on the airport, and whether the proceeds would go to the existing owners or the Government. The likely multi-million payout would potentially be a key source of reconstruction funding, and its fate is likely to be a key point in negotiations with the GBPA and Hutchison Whampoa.

And another key consideration is whether Grand Bahama International Airport should be rebuilt on its existing site, or relocated, in a bid to improve its resilience to hurricanes and other natural disasters given that it has flooded three times in about seven years.

The decision last week by Grand Bahama Airport Company, which is owned 50/50 by Hutchison and the GBPA, the former having management control, to lay-off 11 staff with fears of more to come was interpreted by many Freeport residents and businesses as a further signal the current owners are not prepared to make the necessary investment to restore the asset.

The GBPA and its owners, the Hayward and St George families, in particular have been criticised for failing to fulfill their development obligations as Freeport's quasi-governmental authority by not taking the lead over the airport's rebuilding.

Magnus Alnebeck, the Pelican Bay resort's general manager, earlier this week told Tribune Business: "I hope there are some serious conversations going on in the background, and the Government is saying: 'Enough is enough'.

"It can't continue like this. We can't have Grand Bahama without an airport, and that's what it looks like at the moment. What I understand is that when there are two to three flights on the ground at the same time, this temporary like-barracks [terminal] is incapable of dealing with it."

And Carey Leonard, the Callenders & Company attorney, added: "It is clear the Haywards and St Georges don't know what they're doing, and Hutchison's interest is to get out.

"I do believe the Government can make it work, but they have to act and they have to act now to take both the harbour and the airport. If the Government takes control of that infrastructure, it will find itself in a much stronger and more able position to make Freeport's economy work."

Given that the ITM/Royal Caribbean project's projected build-out will take 21-24 months, the Government will effectively have around two years to ensure Grand Bahama International Airport is rebuilt following its devastation by Hurricane Dorian's storm surge.

Securing sufficient international airlift will be vital to the success of a development that is promising to create 2,000 jobs and bring two million extra passengers to Freeport per year in a "game changer" that could rescue the city's stopover tourism industry and wider economy.

While a temporary terminal and associated facilities have been put in place, international airlines - especially American Airlines and its connectivity to Miami - have yet to resume service to Grand Bahama, which is currently reliant on a combination of Bahamasair, Silver Airways, Sunwing and Western Air for domestic and international airlift. There is also no indication when US pre-clearance will return.

Multiple observers have argued that Freeport's industrial sector and whole economic model will be undermined without a restored airport.