By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Investment bankers yesterday said they will raise the $150m funding for Family Island airport upgrades via a series of $20m-$30m bond offerings that will start to be placed by the second quarter’s end.
Jim Wilson, pictured, RF Holdings (formerly RoyalFidelity Merchant Bank & Trust’s) vice-president of corporate finance, told Tribune Business that the timing of the various bond issues to Bahamian investors will be determined by the airport construction schedule and when financing for this has to be in place.
Disclosing that commercial bank bridge financing will likely be used to kick-off construction, with the bond offering proceeds ultimately taking this out and replacing it as a long-term capital source, Mr Wilson said pricing, tenor and other commercial terms for the issues have yet to be finalised.
“Having a mandate is step one. Now we have to get it all together,” Mr Wilson said of the airport financing. “Our intention is going to be somewhere in the neighbourhood of between $20m-$30m per tranche. It really depends on the construction schedule.
“We’d like to have the first [bond] tranche out before the end of the second quarter, but it could push into the third quarter depending on when we get the documents out.”
RF Holdings, in a statement yesterday, confirmed previous Tribune Business reports that has been hired as the financial adviser and placement agent charged with raising up to $150m from Bahamian investors on the Airport Authority’s behalf to fund infrastructure upgrades at various Family Island airports.
These include the airports on Exuma, Long Island, Abaco, Great Harbour Cay (Berry Islands) and North Eleuthera, with the improvements designed to expand their passenger-handling capacity and improve air access to the islands so tourist arrivals can increase post-COVID.
Michael Anderson, RF Holdings’ president, said the bonds’ pricing will be determined by the anticipated number of passengers passing through each airport, and the revenues and cash flow generated, as a portion of this will fund the interest payments to investors.
Pointing out that the capital raising will likely be spread out over “a couple of years”, he added: “We expect the market to be fairly interested in these deals and expect the return to be reasonably attractive....
“We anticipate that it will be fairly well supported. I think our initial assessment is that it will be well supported.” Mr Anderson said the financing raised will help “get tourism back up and running”, with Mr Wilson adding it was “just a function of when” this will happen.
Algernon Cargill, the director of aviation, said the Government will create a special purpose vehicle (SPV) that will then licence the various airports to a private sector manager/operator once the construction is completed similar to the model employed with the Nassau Airport Development Company (NAD).
Renovations are expected to take between 18 to 24 months to complete, with the Inter-American Development Bank (IDB) also providing financing. Mr Cargill said: “One of our key goals is to ensure that all our facilities meet international standards, which is urgent given current economic challenges.
“Deficiencies in Family Island airports greatly impede their earning potential from a commercial and a tourism standpoint. Through this public-private partnership we will address these deficiencies and provide a means of economic growth while not placing any burden on the public purse.”
Mr Anderson added: “These projects will serve as a catalyst towards recovery in The Bahamas following the devastating impact of the COVID-19 crisis and Hurricane Dorian, and will lead to the resumption of growth in the local economies.”
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