The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has been negotiating to acquire the Grand Bahama Port Authority (GBPA) for months with the Prime Minister yesterday confirming it is “willing to step to the plate” and agree a deal itself.

Philip Davis KC, speaking as the Cabinet met in Grand Bahama yesterday, said the Government had informed the existing owners of Freeport’s quasi-governmental authority - the Hayward and St George families - that it is prepared to acquire the GBPA and its affiliated assets if no suitable private investor or buyer emerges.

Asked to confirm if the GBPA might be sold, and the Government acquire it, the Prime Minister replied: “If it’s going to be sold, it requires government approval, and we’ll approve any agreement for the sale of the Port Authority once it’s going to align with the benefits we have identified that could be had by Grand Bahamians and The Bahamas in particular.

“And the Government itself is willing to step to the plate to acquire the Port, and we’ve made that known to the families as well.” Mr Davis’ comments reaffirm what multiple sources have been telling Tribune Business for some time, namely that the Government has been speaking to both the St George and Hayward families, and their representatives, about its willingness to acquire the GBPA for months.

This newspaper was told the St George estate is united in its willingness to exit, and sell, their 50 percent interest in the GBPA and its Port Group Ltd if the terms and price are right. However, the intentions of the Hayward side are understood to be less clear.

The Sir Jack Hayward 1993 Discretionary Settlement, which is the trust that holds the family’s 50 percent GBPA interest, is currently under the control of Supreme Court-appointed judicial trustees. These are Paul Winder, an expatriate banker with Lyford Cay-based Deltec Bank & Trust, and Rhone Trustees.

It is understood that the judicial trustees have requested that one of the ‘Big Four’ accounting firms conduct a valuation of the GBPA and Port Group Ltd assets, and their worth, to determine a reasonable purchase price that could stand up to future challenge. More than one source has suggested talks with the Government have focused on a price in the $150m-$175m range for the entire concern.

Other contacts, though, have scoffed at such figures and suggested it was both highly unlikely that the Hayward family will sell or that the Government would buy-out the St Georges and settle for becoming its 50/50 partner. It was also suggested that no formal offer has been forthcoming from the Government yet.

Tribune Business understands, though, that the Government plans to use its financial claims against the GBPA as leverage to squeeze the families if it is unable to achieve a smooth sale. The Davis administration has already invoked sections in the Hawksbill Creek Agreement that stipulate the GBPA must reimburse it if the cost of providing public services in Freeport exceeds the city’s tax revenues.

The dispute may be put into arbitration if the two sides are unable to resolve their differences, with Freeport’s quasi-governmental authority arguing that the Government is incorrectly interpreting this clause to cover multiple public services not contemplated by the original agreement. However, it is thought the Government plans to repeatedly come back to this issue in the belief the families will be unable to pay what is owed.

Mr Davis, when asked yesterday whether the GBPA has paid what the Government claims is due and owing to Bahamian taxpayers, replied: “Well, I’m waiting to hear what they have to say. This is a matter we’ve discussed and they ought to have gotten back to us by the end of October.”

However, he blamed the West Grand Bahama and Bimini by-election, which will be held today, and other events such as the upcoming COP28 climate change conference, for dominating the agenda. “Unfortunately, as you know, things have happened so I’ve not been able to pay any particular attention to it, but after this event tomorrow and early next week we’ll be back at the table to see where they are and what they’re thinking.”

Ryan Pinder KC, addressing the Senate during the 2023-2024 Budget debate on the alleged reimbursements, said: “It should be made clear that any claim by the Government is pursuant to section 1(5) of the Hawksbill Creek Agreement.

“This section has never been amended and therefore remains in force and binding. Section 1(5) of the Hawksbill Creek Agreement provides that costs borne by the Government for certain activities and services provided would be reimbursed by GBPA for amounts in excess of Customs duties and emergency taxes collected.”

Mr Pinder argued that attempts to collect the alleged arrears owed by the GBPA under the former Christie administration were “resisted”, leading to the two sides agreeing a Memorandum of Understanding (MoU) that provided “governance concessions”being put in place a year later.

He said: “Furthermore, their assertion that no government has ever pursued these amounts is patently incorrect. The GBPA would recall that, in 2015, under Prime Minister Christie, a Hawksbill Review Committee was comprised to review matters related to the obligations under the Hawksbill Creek Agreement, including the applicability of section 1 (5) reimbursements.

“The Hawksbill Creek Agreement Review Committee under the former PLP government went so far as to commission their own independent financial review of amounts that would be owed. At that time the GBPA likewise resisted the pursuit and calculation.

“This resistance resulted in a Memorandum of Understanding being entered into in 2016 with the Government that provided certain governance concessions and pledged to work through all questions raised by the Government regarding Section 1(5).”

It is unclear how the Government plans to finance any GBPA acquisition, given that it remains cash-strapped with cash flow difficulties, but there is a belief that it must have a private investor or consortium “waiting in the wings” to acquire the profit-making assets that come under Port Group Ltd. The Government would take control of the GBPA, and its quasi-governmental powers.

The key assets are Port Group Ltd’s 50 percent ownership stakes in Freeport Harbour Company and Grand Bahama Development Company (DevCO), in which it is a partner with Hutchison Whampoa which has Board and management control. There are also a variety of other land-holding companies, such as Freeport Commercial & Industrial and Carrick Ltd.