The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Nassau Cruise Port’s transformation has $284.3m in total financing needs with its developer/operator having the ability to introduce new services and charges at its “discretion”.

The details are revealed in documents issued to potential investors for the port’s upcoming $130m bond offering this month, which is aiming to raise sufficient capital to finance construction work for the next 12 months.

The documents, which have been seen by Tribune Business ahead of a meeting between Nassau Cruise Port, its CFAL financial advisers and capital markets players today, reveal that the developer is seeing to raise a mixture of $80m Bahamian dollars and $50m US dollars from both local and international sources in the current financing round.

Its financial plans involve raising a further $80m in additional debt during the 2021 first half, taking the total debt component to $210m.

The balance will feature $74.3m in equity that will be split between its shareholders. Global Ports Holding and The Bahamas Investment Fund, the latter of which will be the vehicle through which Bahamian investors will have an ownership interest in the cruise port, will each invest for a 49 percent stake while the non-profit Yes Foundation will own the remaining two percent.

Of the total $284.3m raised, some $204m will cover construction work that is designed to transform Prince George Wharf into a true destination that will help to increase both cruise passenger per capita spending and act as a catalyst for downtown Nassau’s redevelopment.

A further $20m has been earmarked to cover development, design, engineering and inspection costs, while $34.3m of expenses are accounted for by financing costs. The $26m balance, according to the document, will go towards “ancillary community contributions”.

The current $130m bond offering, which the document says is due to launch on Monday, May 4, will carry an eight percent interest coupon that is payable semi-annually. Principal repayments will take place in ten annual instalments beginning on June 30, 2021.

One financial markets source, speaking on condition of anonymity, said the eight percent interest rate was attractive compared to the meagre returns investors currently obtain on bank deposits. However, they voiced concern over the current COVID-19 uncertainty engulfing the global cruise industry, especially when it would resume sailing and how long passenger volumes will take to recover.

“There’s a lot of unknown territory, and the timing of this offering with everything else going on is not great,” they added. However, Mehmet Kutman, Global Ports Holding’s chairman, told a recent conference call that he personally believed “the cruise industry will bounce back from this crisis stronger than before” and that demand will “remain undiminished in the medium to long-term”.

The projections contained in the Nassau Cruise Port bond offering document show a “V-shaped” dip in passenger arrivals to The Bahamas’ main cruise port in 2020, with volumes rebounding in 2021 and recovering to pre-COVID-19 levels in around 2023. From there they are forecast to grow steadily to between 7-8m passengers by 2040.

Revenues are also projected to grow to over $100m by that same year, with operating income (EBITDA) reaching just below $80m at the same point. The document adds that Nassau Cruise Port, armed with its 25-year concession from thew Government to manage and operate Prince George Wharf, “has the right to increase the port charges by the rate of inflation”.

It also has the “right to introduce additional services and charge for the same in Nassau Cruise Port’s commercial discretion”. With 113 new cruise ships on order as at March 2020, representing additional capacity of 232,172 passengers and schedule for delivery through 2027, Nassau Cruise Port said industry capacity was set to grow by around 50 percent.