The Tribune

• US lender cuts debt needs to $60m/$70m

• Cabinet Office ‘levelled’ in six to seven weeks

• Confident $25m Bahamian IPO ‘oversubscribed’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A US institutional investor “has set a pretty aggressive bar” for other lenders to match by supplying Nassau Cruise Port with $40m towards its construction financing needs, its chief executive revealed yesterday.

Michael Maura told Tribune Business the Prince George Wharf developer was talking to multiple other institutional lenders/investors about providing the remaining $60m-$70m in required debt funding, as he disclosed that this might be placed “in tranches” rather than via a second bond offering as previously planned.

Besides confirming Nassau Cruise Port’s increased financial flexibility, Mr Maura also revealed the Government has given its contractor the go-ahead to “demolish and level” the Cabinet Office building in Rawson Square as well as the Adderley Building to which it is linked.

The demolition is forecast to last between six to seven weeks, with workers presently removing asbestos from the Churchill Building that contains the existing Cabinet Office. Mr Maura said the site will then become a temporary green space and parking area for government employees prior to the construction of a new Cabinet Office location.

The Nassau Cruise Port chief also voiced confidence that the $25m initial public offering (IPO) of a collective 49 percent stake to small Bahamian retail investors, scheduled for October 2021, will be “oversubscribed” despite COVID-19’s impact on employment and incomes for many.

Pointing out that Global Ports Holding has committed to providing a $10m loan facility to help Bahamians buy-in to the IPO, Mr Maura said potential investors should draw confidence from the cruise industry’s post-COVID rebound and its status as “the biggest gateway to The Bahamas” for tourism.

Based on confirmed cruise line berth bookings, he told this newspaper that monthly calls on Nassau by Florida-based ships are projected to increase by 62.5 percent between September and December 2021 (see other article on Page 1B). And Mr Maura pledged that such demand, coupled with Prince George Wharf’s $250m transformation, will make the Bahamian capital “the envy of the region” for cruise tourism.

He spoke after Global Port Holdings, the cruise port’s 49 percent controlling shareholder, revealed that the latter had received a further $40m in debt financing in June 2021 as a “first step” towards raising the additional funding needed to complete construction works.

“The committed investments in Nassau Cruise Port are progressing as planned. The financing of the remaining works will be provided by additional debt and equity capital, to be raised as needed,” Global Ports Holding said in its results statement for the 15 months to end-March 2021.

“As a first step, in June 2021 Nassau Cruise Port raised $40m additional non-recourse financing from an institutional US-based investor, with a final maturity of 20 years.” Mr Maura declined to identify the investor involved, or the interest rate, terms and conditions associated with the loan, other than to say it had “set a pretty aggressive bar” for other lenders that Nassau Cruise Port is talking to.

He confirmed that the cruise port developer/operator was keeping its options open on how it met its remaining debt financing needs, with the total sum required likely to be determined by the IPO’s success and how much equity funding is raised. Non-recourse financing is attractive for infrastructure/real estate developments because it means that lenders are entitled to repayment only from the profits generated.

Affirming that Nassau Cruise Port’s main goal was to “keep the cost of money” as low as possible, Mr Maura said: “We haven’t finalised the debt raise, and are in the process of going to market on the equity. It’s very possible, and I would expect, that we would be oversubscribed on the equity and that will influence the number we take up on the additional debt.

“I think we’re looking at around $60m-$70m in additional debt, and that assumes we can go to $50m on the equity.” He added that Nassau Cruise Port was working with both Citibank’s Bahamas and New York office, and particularly the latter’s infrastructure financing team, to aid the capital raising and determine the best mix.

Mr Maura said their hiring “made a lot of sense” given Citibank’s role in structuring and raising the $409.5m to finance Lynden Pindling International Airport’s (LPIA) redevelopment, and its experience with - and knowledge of - The Bahamas and its tourism industry.

Indicating that Nassau Cruise Port may meet its remaining debt financing needs “in tranches” from specific investors, rather than via a second bond offering, Mr Maura told Tribune Business: “We are continuing our discussions with other debt lenders that are in the infrastructure space, and insurance companies and pension funds.

“We have secured $40m and are in discussions with others. We have been in talks with institutions that are interested in taking the balance. The equity issue is still planned for October, so in September we will begin the process of issuing the PR and marketing material for that. The offering memorandum has been in production for the month of August.”

Global Port Holdings, meanwhile, revealed that some $60.8m was invested in Nassau Cruise Port’s transformation over the 15 months to end-March 2021. That was financed from the $124.5m proceeds from the latter’s initial bond offering in 2020 at the height of the COVID-19 pandemic.

Meanwhile, having completed demolition of the old Port Department building at Prince George Wharf, Nassau Cruise Port and its contractor have been given another task. “We have received instructions from the Government to commence demolition of the Churchill Building,” Mr Maura disclosed.

“I know the Government has a rendering that speaks to the design and look of the new Cabinet Office, but we’re not responsible for constructing the new building. Our responsibility is the Churchill Building and Adderley Building; the two of them are tied together. Both will be coming down.

“We’ve actually started the process of removing the asbestos; both buildings have asbestos. We expect to have those buildings demolished in about six to seven weeks, and they will be completely levelled. We’re going to clean the site, and while the Government finalises the new design for the Cabinet Office we’ll replace those two buildings with parking for government employees and green space on a temporary basis.

Mr Maura said Nassau Cruise Port had completed all necessary dredging a week ago, and was “on track” to finish all marine-related infrastructure works and have use of its expanded northern-most berth by December 2021.

The foundation for Prince George Wharf’s new arrivals terminal is presently being installed, and he added: “We are finalising our permits with the Ministry of Works for the town centre and marketplace, and the ground transportation area which will support the taxis and tour operators. We’ll have all of our authentic Bahamian merchants in business by summer next year.”

Bahamian investors will be subscribing for shares in The Bahamas Investment Fund, a vehicle that will hold a collective 49 percent stake in Nassau Cruise Port, in the upcoming IPO. Asked why he was “very confident” that the IPO will be fully subscribed, Mr Maura said: “While we have had a significant contraction of the economy over the last 18 months, there’s still a lot of cash that people have no place to put it or invest it.

“While unemployment does hurt the small investor for sure, as part of our project commitment there’s a $10m interest-free loan that will be made available to small retail investors, people that may otherwise not have the opportunity to invest in something like this but have good jobs and the ability to repay it. The company does have that $10m loan that will be made available.”