Nassau Cruise Port Ltd. (NCP) commences its bond issue today to raise $130 million, confident that the cruise industry will rebound and that The Bahamas will play a pivotal role in the overall recovery of cruise line business when the novel coronavirus (COVID-19) threat has passed, Chief Executive Officer of Nassau Cruise Port Ltd. Mike Maura told Guardian Business yesterday.
The private placement bond offering, with its minimum $50,000 investment which will raise $80 million in Bahamian dollars and $50 million in U.S. dollars to begin aspects of the redevelopment of Nassau’s cruise port, is expected to be fully subscribed, noted Anthony Ferguson, president of Colina Financial Advisors Ltd. (CFAL), the lead placement agent for the bond.
“Institutional players know that many challenges are for a time period,” said Ferguson.
“When they invest this week and next week, they aren’t investing for the cruise ships to be coming in June or May, they are investing because they know in 2022 – by then we feel very confident that there will be a vaccine and a solution to COVID-19 – we would have the most iconic, newest port in the Caribbean; that we would then be one of the few ports to take advantage of the surge in cruise passenger travel that we see beginning in 2022/2023.”
Ferguson added that investors are also guaranteed 16 percent on their investment by 2022, which he said can’t be found “anywhere else”.
In 2022, the cruise port will begin operating in its fully redeveloped state.
Maura contended that while cruise companies have found themselves in financial turmoil due to COVID-19, there remains traveler confidence in cruising, given that more than “50 percent of the people who purchased a cruise did not want their money back”.
“I think that’s a very telling statistic,” Maura said.
According to Ferguson, the bond facility will have a 20-year final maturity and an interest rate of eight percent per annum. The bond offering will close on May 15.
In a press statement on the bond issuance, NCP noted that the bond proceeds will be used to begin the extension of the Port of Nassau’s berthing capacity; the creation of a new inner harbor to facilitate the transfer of cruise passengers by sea; the creation of recreational, entertainment, retail and food & beverage spaces; and related design, engineering and inspection costs.
“Part of the proceeds will also be used to provide community contributions that will assist local entrepreneurs and merchants with enhancing their businesses and to support Bahamian ownership in the project,” the statement pointed out.
Maura said in the statement that the launch of the bond offer will be a win for the entire country.
“This bond offering is a huge step in a very positive direction for so many reasons,” he said.
“This launch reaffirms our company’s commitment to the Bahamian people and to seeing this national asset transformed into a singularly spectacular waterfront destination that will provide substantial benefits to our economy.
“Additionally, as the construction component of the project moves forward, at least 80 percent of the labor required will be provided by Bahamians. Between 2020 and 2022, this project will create about 1,000 construction and permanent jobs, so we’re looking forward to moving quickly through the various phases to maximize these benefits to Bahamians.”
The bond offering that begins today is a separate offering from the initial public offering (IPO) that all Bahamians will be able to participate in, which is being called the Bahamas Investment Fund (BIF).
“Through the IPO, all Bahamians will have an opportunity to invest in the BIF, facilitating broad-based Bahamian ownership in the project,” the statement noted.
Senior Vice President of Commercial Development at Norwegian Cruise Line Holdings Steve Moeller said in the statement that the port will be significant in the revitalization of Downtown Nassau and the growth of economic opportunities for Bahamians.
“We can’t wait to introduce our passengers to the new Nassau Cruise Port and welcome them to The Bahamas once again,” said Moeller.