The Tribune

• Final 17% of $150m bond paid before year-end

• Global Ports chief aims to beat Nassau deadline

• $30m invested to-date in Prince George Wharf

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau Cruise Port only received 83 percent of its $150m bond proceeds upfront after agreeing a "delayed draw" deal with "certain investors" for the remainder to be paid by year-end, it can be revealed.

Top executives with Global Ports Holding, its UK-listed controlling shareholder, revealed that this $25m will be received from those investors during the final months of 2020 during a recent conference call with analysts to discuss the company's half-year results.

Jan Fomferra, Global Ports Holding's chief financial officer elect, explained that the "delayed draw" arrangement - which enables its Bahamian subsidiary to access this sum over a period of time - was designed to reduce Nassau Cruise Port's interest exposure to the bondholders.

Given that the entire $150m was not needed in a single lump sum to finance Prince George Wharf's transformation, he indicated to analysts that deferring acceptance of the final $25m meant Nassau Cruise Port would not immediately incur any obligation to pay interest on that portion of investor capital.

"All but $25m was raised upfront," Mr Fomferra said of Nassau Cruise Port's bond offering, which was placed at the height of COVID-19 lockdown restrictions. "Just to reconcile for readers of the financial statements, you will see that the amount of the bond outstanding at the time of reporting was $125m.

"Firm subscriptions have been received for $150m, but to minimise the negative carry we have agreed with certain investors a delayed draw feature. Throughout the remainder of this year we collect the other; the outstanding $25m, so we will go to $150m outstanding on the bond by year-end."

Global Ports Holding did not name the investors involved in the "delayed draw" deal, while Michael Maura, Nassau Cruise Port's chief executive, could not be reached for comment despite Tribune Business efforts via phone call and What's App.

However, one investor yesterday voiced surprise that the arrangement had not been disclosed previously to the wider capital markets. "It appears there was a deal within a deal," he added, speaking on condition of anonymity and confirming this was the first they had heard of a "delayed draw".

The $25m "delayed draw" piece largely represents the over-subscribed portion of Nassau Cruise Port's bond offering. The port developer, in which Global Ports Holding has a 49 percent equity interest and management control, had initially sought to raise $130m but received sufficient subscriptions to hit $150m.

Mehmet Kutman, Global Ports Holding's founder and chairman, told the same conference call that Nassau Cruise Port was "pushing very hard" to complete Prince George Wharf's $224m redevelopment some two to three months ahead of the April 2022 finish target.

While construction work was some 42 days behind schedule presently, Mr Kutman said an earlier finish would boost Nassau Cruise Port's operating income and revenue margins. "Right now we are unfortunately not ahead of schedule," he admitted to analysts.

"We are around 42 days behind schedule, but when I have spoken to our construction company they hope to finish it ahead of schedule. The reason we are behind schedule is because the country was locked down [for COVID-19], like most places, so the construction people could not get in.

"We are set to complete construction by April 2022, [but are looking at] maybe two to three months before that, and are pushing that very hard. You are right. The sooner we are finished, the higher those margins, the EBITDA (earnings before income, taxation, depreciation and amortisation) and revenues will be."

Global Ports Holding's financial statements revealed that Nassau Cruise Port will require no further financing for its construction works until the 2021 second half, with the existing bond proceeds sufficient to cover the marine works and take the project into its land-based phase next year.

Mr Kutman also forecast that Prince George Wharf's transformation could be funded solely from debt financing, and that the proposed $74.3m equity component will not be required before the 2021 second and fourth quarters.

"So far nobody has put in any equity yet," he said. "We're supposed to put in equity. There's a strong possibility that it will be fully debt financed."

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.

"The marine component is contracted and under way, which will carry us through into 2021," Mr Fomferra added. "That marine component [of construction] is fully funded by the bond. Total capital expenditure there would be in the region of $100m-$110m, so there is another $70m-$80m to go under this.

"Then, in 2021, we're looking to complete the landside development and any necessary financing needed for completion of the project." The marine works involve the extension and expansion of two berthing piers at Prince George Wharf. The old Customs warehouse has already been demolished, while the present Festival Place facility will endure similar treatment within the next fortnight.

"This phase will involve completing the marine works, which includes material purchases, an expansion of the berthing capacity of the port, and upgrades to existing infrastructure," Global Ports Holding added of the marine works.

"In 2021, phase three will see the completion of the landside works, including the new arrivals terminal and plaza, Junkanoo Museum, retail Market Place, amphitheatre, and other food and beverage and entertainment spaces.

"The project will also see the port integrated into Bay Street with the expectation that it will serve as a catalyst for the wider development of downtown Nassau. Transforming not just Nassau Cruise Port into one of the iconic cruise destinations in the world but also transforming the experience for cruise passengers, locals and the cruise lines, while generating local jobs and driving economic growth."

Global Ports Holding's financials said some $29.8m had been invested in Prince George Wharf's redevelopment by end-June 2020. They also disclosed that the accounting treatment for the construction project had boosted the company's group-wide revenues by some $22m year-to-date, boosting first-half cruise revenues by almost 42 percent to $33.9m.

This is because the concession agreement with the Government, which allows Global Port Holdings to manage and run the Nassau Cruise Port on a long-term lease, enables it to recognise construction spending as revenue under international financial reporting standards. The project is effectively treated as a public-private partnership (PPP) run under a build, own operate, transfer (BOOT) deal.