• Top executive: ‘We’re so much more than just a cruise port’
• $138m debt to be refinanced 200 basis points lower at 6%
• Hailed as ‘global blueprint for future cruise port projects’
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Nassau Cruise Port will save close to $3m per year from refinancing the existing $138m bond debt that kickstarted its redevelopment, with its top executive yesterday saying: “We’re so much more than just a cruise port.”
Michael Maura, the Prince George Wharf operator, told Tribune Business that the $300m transformation that is scheduled to be completed by end-May 2023 will enhance “the value proposition of the destination” by both adding amenities such as a Junkanoo Museum and serving as a catalyst for the wider regeneration of downtown Nassau.
He spoke as its controlling shareholder, Global Ports Holding, hailed the project “as a global blueprint for future cruise port investment”. And it was also confirmed yesterday that Nassau Cruise Port is aiming to refinance its existing bonds at an interest rate that is some two percentage points lower than when it was placed at the height of the COVID-19 pandemic in May-June 2020.
A note issued to the Bahamian capital markets by CFAL, the investment house/broker charged with placing the refinancing, confirmed that investors will be offered a 6 percent interest coupon as opposed to the existing 8 percent rate. Based on $138m in debt principal being refinanced, Tribune Business calculations show annual interest (debt servicing) payments will fall from $11.04m to $8.28m - generating a $2.76m saving.
“In the conversations I’ve been party to everything looks good for the refinancing,” Mr Maura told this newspaper, voicing optimism it will be fully subscribed. “Obviously the business is bouncing back; our numbers are great. We would also have had the benefit of being able to increase the passenger facility charge by 6.8 percent on January 1, 2023, and we would have advised the cruise industry rates will go up by a further 7.1 percent on January 1, 2024.
“We’ve got growth happening in our revenue lines, supported by phenomenal projections where for 2023 we’re looking at 4.2m passengers, and we’re very confident we will hit 4.5m passengers in 2024. We’ve got industry partners practically shouting their support for Nassau, recognising there is a new Nassau that is about to be unveiled on May 26, so this is good news for everybody.”
Offering documents for the Nassau Cruise Port refinancing will be issued to investors on April 11, 2023, immediately after the Easter holiday, CFAL informed the market. The offering will take place between April 17 and April 28, closing on the latter date. Principal on the new bonds will mature on June 30, 2040, but they will not be redeemable during the two years immediately after the offering closes.
CFAL said additional subscriptions “will be accepted on a first come, first serve basis”, but Bahamian capital markets observers spoken to by Tribune Business yesterday forecast that most - if not all - existing investors will decide to rollover into the new securities as 6 percent still represents an attractive rate of return on fixed income securities and there are few alternative investment options.
“That’ll be a slam dunk exercise,” one contact, speaking on condition of anonymity, said. “That [$2.76m saving] is real money that will go to their cash flow. It’s less risky now that the port is open. It has cash flow. The near-$3m in interest savings would make a huge difference to their bottom line, huge. All of them will roll because there’s nothing else.”
Another source, voicing similar sentiments, added: “I’m not sure there’s another investment offering in the market, and if there’s an opportunity to get a 6 percent return most people - if they don’t have something else to do with those funds - will roll over.
“With the current number of cruise ships coming to port, and work close to completion, it’s a better situation than when they went to market initially. That was at the height of COVID, so it was difficult to raise money, and there was a higher risk at the time because the project had just started and may not have completed.
“In today’s world, where we see the economy improving and the cruise port moving forward, it seems a much lower risk offering and the returns are suitable. It’s a significant cost saving to the entity, and I’m sure it’s to the benefit of ordinary shareholders.” Besides Global Ports Holding, with its controlling 49 percent stake, Bahamians collectively own another 49 percent interest via the Bahamas Investment Fund, with the 2 percent balance held by the Yes Foundation.
Global Ports Holding, in recently unveiling its financial results for the nine months to end-December 2022, said Nassau Cruise Port had received close to four times’ as many passengers as it handled during the COVID-hit prior year comparative when cruising only resumed in June 2021.
“Nassau Cruise Port benefited from its proximity to the key home ports in Florida and the cruise lines’ continued desire to operate a higher volume than normal of short cruises in this area at the expense of longer itineraries to other parts of the Caribbean,” Global Ports Holding said of the nine months. “As a result, Nassau Cruise Port welcomed 2.6m passengers in 2022, up from just 687,000 passengers in the comparable period last year.
“Nassau Cruise Port, on some days, is now hosting six cruise ships simultaneously, utilising the new berthing that was created as part of our significant investment into the port. On February 27, 2023, the port welcomed record of 28,554 passengers in a single day.
“During the nine-month period, we continued to invest in the transformation of Nassau Cruise Port, and as Global Ports Holding’s investment into the port nears completion, the vision for this port is becoming a reality. Global Ports Holding’s management believes this port will stand as a testament to Global Ports Holding’s cruise port and destination development capabilities, and as a global blueprint for future cruise port investment.”
Mr Maura yesterday told Tribune Business: “I would say that what makes our project different from most marine infrastructure projects is that, while ours most definitely has a port marine infrastructure component, it’s very much a project about the improvement of landside infrastructure and the value proposition of the destination.
“That can be seen in the 62 retail and food and beverage spaces built into our project along with the Junkanoo Museum, along with the amphitheatre, and along with the expansion that comes from this project. We are so much more than a cruise port operation and marine infrastructure developer. We are a community partner in that we are literally improving the destination of downtown Nassau.”
Global Ports Holding added: “Growth in the number of ships and the size of ships means that many cruise ports will need to invest in their infrastructure in order to be able to accommodate the new larger ships. There is no better example of this type of investment than Global Ports Holding’s significant investments into Antigua Cruise Port and Nassau Cruise Port.
“Despite the impact of the COVID-19 pandemic on Global Ports Holding and the cruise industry, our investment to increase the capacity of these ports and transform the passenger experience has largely continued as planned over the last two years. This demonstrates the commitment of Global Ports Holding and our partners to our ports and destinations.”