The Tribune

• Cruise port bond refinance raises $145m

• Excess to fund ‘additional development’

• Aiming to ‘surpass’ 2024’s 4.6m forecast

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Nassau Cruise Port’s overhaul is “already serving as a catalyst” for fresh investment in downtown, its top executive has asserted, after its recent bond refinancing was oversubscribed by almost $11m to hit $145m.

Michael Maura, the Prince George Wharf operator’s chief executive, told Tribune Business that it will retain the excess financing - representing monies from new investors who did not participate in the original 2020 offering - to fund “additional development possibilities” such as a children’s adventure park, mega yacht expansion and liquor tasting facility.

And, with the cruise port’s $322.5m transformation now 95 percent complete ahead of its end-May formal opening, he voiced optimism that this is already generating sufficient “confidence” among downtown Nassau property and business owners who have access to capital to reinvest in their assets. Nassau Cruise Port is also confident about its ability to “surpass” 2024’s projected 4.5m-4.6m cruise passenger visitors.

“There was an oversubscription,” Mr Maura told this newspaper of the bond refinancing, which closed on Friday. “This means we were able to refinance the original $134.4m and also there were others, who were not part of the initial debt raise, who chose to jump in so we came in at around approximately $145m. It was additional folks coming in. It went very well.”

Disclosing that Nassau Cruise Port’s staff moved into their new offices at Prince George Wharf over the weekend, having finally vacated the rented Bay Street premises they occupied during the reconstruction, he said the operator will likely retain the extra $11m raised.

“The cruise port has additional development possibilities that include an adventure/fun park for children, a high-end liquor tasting experience, the expansion of our mega yacht facility and ongoing debt service needs, so these funds are welcomed,” Mr Maura said.

“It’s quite remarkable what we have achieved. We have given the downtown Nassau waterfront so much more than a facelift. This over $300m cruise port and commercial and entertainment development has elevated the status of the destination and provided a catalyst for further investment by downtown and the wider New Providence stakeholders.”

CFAL, the investment advisers and placement agents for the $134.4m bond refinancing, yesterday confirmed previous Tribune Business reports that the issue will save the Nassau Cruise Port around $3m in annual interest (debt servicing) costs by reducing the interest coupon by two percentage points - from 8 percent to 6 percent.

The new rate still represents a healthy return for investors compared with bank deposits and alternative capital market investments. Those who bought into the refinancing will also have accepted a reduction from 8 percent to 6 percent because the Nassau Cruise Port project has effectively been de-risked compared to the original 2020 issue, with construction almost complete and forward cruise ship bookings and passenger numbers ahead of pre-COVID figures.

Mr Maura, describing the offering’s outcome as “a testament” to Nassau Cruise Port’s progress, said: “We’re 95 percent complete with this project. Our marine works are already complete from over a week ago, and we have a grand opening in less than 30 days.

“That contributed to the $145m raised over two weeks. Supporting that is the fact our bookings for 2023 are at 4.2m passengers, and we have confirmed bookings for 2024 of 4.5m-4.6m. We believe that we’re confident we will achieve that 4.6m, if not surpass it, based off the confirmed bookings we have.”

Mr Maura said Nassau Cruise Port, which is 49 percent owned by Bahamian investors through the Bahamas Investment Fund, had always planned to refinance the original bond. “Eight percent is costly. We felt it was appropriate we wait until we were very close to opening so people could see for themselves that this project was completed, the business is strong and what we’ve done on Nassau waterfront is remarkable and provides such a catalyst or additional investment in downtown Nassau,” he added.

“You see every day, driving to work, additional buildings being renovated as we speak. The project provides that economic boost for New Providence just with sheer numbers of cruise passengers passing through Nassau Cruise Port but, at the same time, serving as a catalyst for additional investment in the downtown area that benefits all of us.

“I think it will provide the catalyst that property owners and business operators, who have the capacity to invest or reinvest in the downtown area, need. It’s giving them the confidence, and we can see that. I think, and I don’t work for banks, but I imagine that when they see what is happening in downtown Nassau, the harbour and the waterfront it positively influences the availability of credit facilities for the tourism sector and downtown Nassau because of what we’ve done.”

Once fully open, Mr Maura said Nassau Cruise Port, with its ability to accommodate six ships - including three of the largest Oasis class vessels - on a daily basis will provide an “authentic Bahamian commercial venue that spreads all the way from the Hilton to East Street” with in excess of 30,000 passengers on some occasions.

CFAL, in a statement, said more than 300 investors participated in the bond refinancing including existing debt holders. They were also encouraged to make additional subscriptions, with the minimum investment set at $50,000 and investors having the option to invest in increments of $10,000 thereafter.

Investors will receive their first interest payment on December 31, 2023, with future payments occurring twice annually in June and December until the bond matures on June 30, 2040. Angelo Butler, CFAL’s senior financial analyst, said: “Our target for the bond refinancing was $145 million, so we are extremely pleased with the response from the investment community.

“We want to thank the existing and new bond subscribers for their continued trust in CFAL, and to assure them that their assets will remain in the most capable hands until the bond matures.” The offering memorandum for the bond refinancing described Nassau Cruise Port’s success as “mission critical” for The Bahamas with 35 percent of the country’s economy dependent on a facility that has generated $12.383m in net profits even before its official opening.

As New Providence’s sole cruise port, and with the passenger facility charges adjusted for inflation on an annual basis, Nassau Cruise Port’s virtually guaranteed revenue streams are already translating into bottom line profits even though the redevelopment - now priced at $322.5m, as opposed to $300m - has yet to be completed ahead of its end-May opening.

The cruise port’s unaudited financials for the nine months to end-December 2022, which were attached to the offering memorandum, show a net profit of $12.383m as compared to just $210,520 for the same period in 2021. The latter was when the cruise lines had just resumed sailing following the COVID-19 pandemic, with adjusted EBITDA (operating income) growing more than eight-fold year-over-year from $1.806m to $15.968m for the final nine months of 2022.

Nassau Cruise Port also benefits from improved yields, as it has the ability to raise its port and passenger facility charges in line with inflation as measured by the US Bureau of Labour Statistics (BLS) consumer price inflation index. A 6.8 percent fee increase was implemented on New Year’s Day, 2023, and a further 7.1 percent rise is due to take effect on January 1, 2024.