The Tribune

• Pushed to Q3 to help investors recover

• Same timeline for $100m bond raising

• Passenger numbers forecast to rise 57%

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau Cruise Port’s chief executive yesterday said COVID-19’s economic impact has caused “concerns with the timing” of its plans for Bahamian investors to gain ownership in the $250m project.

Michael Maura told Tribune Business the port had delayed the offering of a collective $24.5m equity stake in Prince George Wharf’s transformation until the 2021 third quarter in the hope that tourism and the wider Bahamian economy will have rebounded sufficiently to boost employment and incomes.

This, he explained, was critical to providing small Bahamian investors with the necessary liquidity to make the minimum $1,000 investment in the Bahamas Investment Fund (BIF), the vehicle that will hold a combined 49 percent stake in the cruise port on their behalf.

“The third quarter is the period we’ll be going out with the Bahamas Investment Fund, and the opportunity for people to invest,” Mr Maura told this newspaper. “There will be significant construction work that will be completed by that time.

“The timing of the Bahamas Investment Fund initial public offering (IPO) has everything to do with providing the small Bahamian, the first-time investor, with the opportunity to see material progress at Nassau Cruise Port so they could see the actual investment.”

The Bahamas Investment Fund IPO had originally been targeted for the 2021 second quarter, but Mr Maura explained this timeline had been pushed back to give potential investors the possibility of having more resources to invest via an improved tourism economy that boosts income and confidence.

“We are confident in our projections, obviously, but we are concerned with the timing because the objective of the Bahamas Investment Fund was broad participation by Bahamian retail investors, with folks investing a minimum of $1,000,” he said.

“For them, that’s like a mature investor spending $50,000. Their $1,000 is very precious. Unfortunately, COVID-19 hit the labour force so hard that it will be a challenge for some people who want to invest to participate because of cash flow issues as a result of a reduction in hours or being out of work.

“That’s why we’re looking at the 2021 third quarter because we see tourism taking a bit of time to get back on its feet, and the summer is traditionally a slower period for tourism. We see it picking back up after September, so we’re hoping that our plans for the Bahamas Investment Fund align with more employment.

Investors will acquire shares in the Bahamas Investment Fund, which will be structured as a mutual fund holding a collective 49 percent stake in the Prince George Wharf transformation project on their behalf. The other shareholders will be managing/operating partner, Global Ports Holding, with a similar 49 percent holding, and the Yes Foundation that will use its 2 percent equity to finance support of good causes.

Mr Maura said the project’s “total equity component” was worth $50m, which places the value of the Bahamas Investment Fund’s IPO at around $24.5m. And that will be far from the only capital raising executed in the 2021 second half, as Nassau Cruise Port’s chief executive confirmed that the development will seek around $100m in a separate bond financing from institutional investors.

“That will be in the third quarter as well,” he explained. “Our project, when it all comes in and we consider financing costs and everything that goes into it, will be above $250m so we expect the next level of bond raising to be close to $100m.”

Together with last year’s $150m bond issue, this would take Nassau Cruise Port’s financing to close to $300m once the equity financing and upcoming debt are factored into the mix. Mr Maura said around $80m has been invested in Prince George Wharf’s revamp to-date, with construction work still on target for completion by summer 2022.

“We’re actually going to be ahead of target on the marine construction. The marine works will be done this year,” Mr Maura said. “The upland works start in July and will be substantially complete by summer 2022.”

The “upland works” involve construction of the amphitheatre that will act as an entertainment centre, together with the planned Junkanoo museum and assorted retail, restaurant and other amenities that are designed to convert Nassau’s port into a destination that acts as a catalyst for Bay Street’s and downtown’s revival and boosts per capita cruise passenger spend.

The existing Port Department building will start to be demolished in two weeks’ time, with Customs and Immigration relocated to temporary facilities on-site. The Port Department, meanwhile, will transfer to temporary accommodation at the East Bay Shopping Centre that lies between the two Paradise Island bridges opposite the Potter’s Cay entrance.

Tribune Business witnessed pilings being driven into the seabed for the berth expansion that will accommodate two Oasis-class cruise ships, the largest model set to resume cruising post-COVID, as well as work being performed on a dock that will serve as a pick-up destination for tour boats taking passengers to attractions such as Blue Lagoon and Pearl Island.

Mr Maura explained that, once construction is completed, Nassau Cruise Port will go from being able to simultaneously accommodate five cruise ships including one Oasis class vessel to six ships inclusive of three Oasis-class vessels.

“From a passenger count perspective we’re going from about 21,000 in a given day if all berths are taken to over 33,000 passengers in a single day if all berths are filled,” Mr Maura said, pointing to a 57 percent increase in visitor footfall.

Besides the 6,500 passengers potentially brought to Nassau on each Oasis class ship, Mr Maura said these vessels also require 2,000-strong crews. Given that one-third typically are given shore leave at a port-of-call, he added that over 3,000 crew will also be on Nassau’s streets on any given day when the port is full.

Mr Maura said the Bahamian labour component in the port’s construction workforce will increase from 60 percent to 80 percent when the “upland works” begin in July. “The sheet pile driving and a lot of the marine works did require some foreign engineering expertise,” he explained.

“We’re about 60 percent Bahamian and 40 percent foreign on this phase. When we move to the upland phase the share of Bahamian labour will be in excess of 80 percent.” Some 250 construction workers are currently employed at Nassau Cruise Port.