The Tribune

* Says could even fall 1.5m in worst case

* But IPO, debt raise are 'certainly coming'

* Cruise chief: Still have 950 vessel bookings

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau Cruise Port yesterday said it has slashed its 2021 arrival estimates by more than one million passengers, or 42.3 percent, due to Carnival and its affiliates delaying their return beyond end-March.

Michael Maura, its chief executive, told Tribune Business that in a worst-case scenario cruise arrivals for this year could possibly fall by 1.5m compared to initial projections as the uncertainty created by COVID-19's economic and health devastation continues to ravage the industry.

Suggesting that a decline of around 1.1m visitors was more likely based on present indications of when the cruise industry will resume sailing from US ports, Mr Maura added that the impact to Nassau Cruise Port's revenues and other financial projections would not affect its ability to service interest payments on the $150m bond it had placed last year.

Asserting that "there's no difficulty there", he said the Prince George Wharf operator will "certainly be coming to market in 2021" to raise both the remaining debt financing needed to complete the cruise port's physical transformation and give Bahamians the chance to own a piece of the upgraded facility via an initial public offering (IPO).

Nassau Cruise Port and its controlling shareholder, Global Ports Holding, which will ultimately own a 49 percent equity stake in the $268m port redevelopment, previously said the IPO would take place in the 2021 second quarter but Mr Maura indicated this timeline could be subject to change due to the uncertainties created by the pandemic.

He added, meanwhile, that Nassau Cruise Port could play host to "simulated cruises" by early March to give both itself and the lines an opportunity to test their COVID-19 health protocols prior to resuming voyages with passengers. While the cruise lines had agreed such trial runs "make a lot of sense", Mr Maura said they would have to be approved by the Government and US regulators.

Revealing that Prince George Wharf still has 950 cruise ship bookings on its books between April and December 2021, COVID-19 and associated health regulations permitting, the cruise port chief said it was using the absence of passengers to press on faster with berth expansion and an overall redevelopment that is scheduled to be completed by March/April 2022.

When finished, Mr Maura said it will enable Nassau to accommodate three vessels from the industry's largest 'Oasis' ship class per day, rather than just the one it could handle pre-COVID. This, he added, will take daily cruise ship passengers from a maximum of 20,000 to 30,000 in time for when vaccines allow the pandemic to subside.

Still, acknowledging the short-term blow from Carnival and its affiliates electing to delay their return beyond the 2021 first quarter, Mr Maura told this newspaper: "In answer to your question, had we anticipated revenue streams at some point in the first quarter? Yes.

"For us, back in the early second quarter of 2020, we had anticipated in 2021 that we would handle approximately 2.6m passengers. The protracted journey that the cruise industry has been on in terms of resuming cruise travel, principally from North America, has and will impact that forecast.

"I would say that we would end up some place between 1m and 1.5m, on the low end at 1m, and more likely at 1.5m, but it really does depend on the Centres for Disease Control and Prevention's (CDC) requirements."

A decline to 1m would represent a 61.5 percent drop compared to initial projections, but a fall to 1.5m would be down just 42.3 percent. Some observers will likely consider these estimates still too optimistic given the pandemic's devastating effects.

The cruise lines are still grappling with the COVID-19 prevention and mitigation protocols imposed upon them by the US health authority, although a designated CDC official is now working with each company to help them come into compliance.

However, Carnival confirmed this week that it will not resume sailing from US ports by the end of March, while its affiliates, Princess Cruises and Holland America, have postponed their returns through May 14 and April 30, respectively. This means one of the world's two largest cruise lines, and its subsidiaries, will miss a first quarter that is traditionally the peak in the sector's calendar.

This also only adds to the misery facing Bay Street merchants and other downtown Nassau businesses that have traditionally relied on cruise ships for the bulk of their customers, including restaurants, as well as the likes of tour operators, taxi drivers, straw vendors, hair braiders and others that all rely upon the sector their livelihoods.

Private island employees will be similarly impacted, and the survival prospects for cruise industry-reliant businesses are becoming bleaker with every month it fails to return, given that it will have been away for a full year since last March's shutdown.

Nassau Cruise Port, meanwhile, had planned to raise the remaining debt financing for Prince George Wharf's redevelopment this year as well as enable Bahamians to own a piece of the port via an IPO of shares in a mutual fund that will hold a combined 49 percent stake in the project.

While these two financings will still proceed, Mr Maura said the timing and details remain to be worked out. "We're in the process of looking at our 2021 calendar, and looking at the funding plans for the remainder of the year," he added.

"What I can tell you for certain is that, yes, we will be coming to market in 2021. What I cannot tell is the months for both, and I'm not saying they will happen at the same time. Both will occur in 2021, but you caught me in the midst of those conversations. I'm a little hesitant to give you specific numbers because we have to go through an exercise of analysis and calculation, but both will happen in 2021."

Nassau Cruise Port's $150m bond last year raised the bulk of the construction financing, leaving the final, smaller eight-digit piece to be raised this year. And Bahamians will hold their ownership interest via the Bahamas Investment Fund, which will hold a 49 percent equity stake in the project worth around $36.4m.

This fund will issue shares to Bahamians via a 'bottom's up' approach that focuses on small, individual retail investors so that no one or large group of controlling shareholders will be able to control the Bahamas Investment Fund.

Acknowledging that The Bahamas is having to play "a waiting game" over the cruise industry's return, Mr Maura said the world had taken much longer to come to grips with COVID-19 than originally projected. He added, though, that this nation's US proximity and multi-island destination meant it would be among the first to rebound when the industry started sailing.

"If you look at our bookings, from April to December, we have just over 950 confirmed bookings. Our bookings are solid," the Nassau Cruise Port chief told Tribune Business. "From our perspective it's a waiting game for sure. We have no doubt that we will be one of the first to welcome the industry once it sails."

Whether those 950 bookings materialise will depend heavily on COVID-19 and when sailing restarts, but Mr Maura added: "One thing we have proposed to the cruise lines is that as part of the CDC's 'return to service' they have simulated cruises.

"What we have suggested, but one has to get the blessing of the CDC and our government, is to include the port of Nassau in a simulation as it will give us an opportunity to test our own protocols in Nassau as a port operator, the Government as regulator and give the cruise lines an opportunity to test their protocols in an international port."

Mr Maura said such "simulated cruises", which would take place without passengers, could happen by early March as the Nassau Cruise Port presses on with its construction efforts. He added that the port is presently finishing a temporary facility for the Port Department ahead of February's demolition of the existing Port building.

"We're adding capacity for two new Oasis class ships, so the port will be able to handle three at the same time," Mr Maura explained. "The cruise port of yesterday could handle only one Oasis class ship at a time.

"That's the biggest vessel in the world. They can have 6,000 passengers and 1,800 crew. In 2019, it was good when the port handled 20,000 passengers a day. In the future, once we get through the COVID-19 craziness it will be able to handle 30,000 a day. That's a lot of people spending money in town."