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WEDNESDAY, JUNE 15, 2022
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‘Put money with mouth’ to escape IMF clutches By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas must “put our money where our mouth is” and prove to global investors why it will not require an International Monetary Fund (IMF) programme to escape its economic and fiscal woes, a top banker said yesterday. Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business the country must show the ability to make “the tough decisions” by itself amid reports that some participants in the world bond markets have been urging the Government to seek IMF financial assistance as a means to create a “policy anchor” for fiscal and economic turnaround. Warning that The Bahamas is “facing a tornado” due to increasingly unfavourable economic and capital market conditions internationally, he added that the Government and its advisors will have to become “more innovative” to both maintain access to debt financing and keep debt servicing
• Bahamas must make ‘tough decisions’ by itself • Price, yields still sliding despite $385m success • Suggestions some bond investors want IMF (interest) costs for taxpayers at manageable levels. Mr Bowe, who headed the Coalition for Responsible Taxation (CRT) when VAT was implemented in January 2015, spoke after an article by Global Capital, an online news site that has covered the global markets for three decades, yesterday sparked much interest in Bahamian financial, business and political circles by voicing concerns over this nation’s just-placed $385m bond offering
Opposition: ‘Shore up’ investors’ confidence By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE BAHAMAS is “not doing anything to shore up” the confidence of investors who are “rightly concerned” about the country’s economic and KWASI THOMPSON fiscal prospects, the Opposition’s finance spokesman asserted yesterday. Kwasi Thompson, ex-minister of state for finance in the Minnis administration, told Tribune Business that “no one wants us to go down that road” of requiring International Monetary Fund (IMF) assistance after capital markets investors quoted in an online news article suggested some bond holders would prefer such an outcome (see other article on Page 1B). The piece by Global Capital, an online news outlet that has covered global financial markets for three decades, also quoted investors as suggesting that last week’s dual-tranche $385m Bahamas bond issue was overly-complicated in its structure despite being partially underwritten by a $200m Inter-American Development Bank (IDB) guarantee. While the issue was ultimately “oversubscribed”, and hailed by the Government as a sign of investor confidence in its economic and fiscal projections and post-COVID turnaround strategy, Mr Thompson said the views raised in the Global Capital piece “confirm a lot of the concerns and fears already raised by the Opposition”. “If the revenue projections are unrealistic as to their terms and cannot be met, that puts the entire deficit in danger,” he argued. “Again, I think investors are troubled and investors are concerned, and rightly so. This Budget does not do anything to shore up the concerns of investors. “I think what is required is for the Government to stick to their targets that were
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and its wider fiscal and economic condition. Data from the Frankfurt Stock Exchange shows that discounts and yields on existing and listed Bahamas government debt issues had continued to trend south despite the successful $385m bond offering. The $825m bond, placed at 8.95 percent at the height of the COVID-19 pandemic’s fallout, is now trading at a near-29 percent discount to face value and a 14.9431 percent yield. Both
GOWON BOWE indicators have deteriorated, indicating investors are pricing in increased risk. The $300m bond placed prior to that at 6.95 percent, before both Hurricane Dorian and COVID-19, was showing better stability at a 26 percent discount to face value and 12.8097 percent yield. However, sources said the signals from both listed bond issues suggest many in the global capital markets see The Bahamas as a “default risk down
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CRYSTAL CRUISES SERENITY
Arrested cruise ships fetch $128m in sale By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net TWO cruise ships that have been under arrest in Bahamian waters for more than four months were yesterday sold for a combined $128m via auction, Tribune Business was told. Richard Horton, attorney and partner at Alexiou, Knowles and Company, who represented the Crystal Serenity and Crystal Symphony’s secured financier, confirmed to this newspaper that the vessels were sold for $103m and $25m respectively.
“For the Serenity, the total amount paid for the vessel was $103m. The buyer was a company called CDE Ltd,” Mr Horton, who acted for DNB Bank, revealed. “For the Symphony, the amount agreed was $25m for the vessel, and the purchaser’s name was CSY Ltd.” Tribune Business understands that CSE Ltd and CSY Ltd are likely special purpose vehicles (SPVs) or entities specifically created to acquire, and hold, the two now-former Crystal Cruises vessels, with CSE standing for “Crystal Serenity” and CSY for “Crystal Symphony”.
• Admiralty marshal gets funds for Crystal vessels • Ultimate buyer’s identity unknown; SPVs used • Bahamian court to decide proceeds ‘carve up’ Well-placed sources, speaking on condition of anonymity, suggested both SPV’s were beneficially owned by a London-based entity but Mr Horton said he was unable to confirm this. Both purchasing entities are represented by the same Bahamian attorney, Aisha Ferguson, McKinney, Bancroft & Hughes’ resident
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$6.13 Disabled crane operators lose Weather Dept tornado claims By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THREE former Freeport Container Port operators have lost their bid to claim damages from the Government over disabilities and “extensive psychological trauma” resulting from the March 2010 tornado that devastated the firm’s operation. Kevin Archer, Samuel Swann and Harrison Moultrie all named the attorney general as a defendant in their respective legal actions, alongside their former employer and its Hutchison Ports (Bahamas) parent, on the grounds that the 2009 decision to close the Freeport Weather Services station meant it was impossible to obtain early warning of “hazardous weather” conditions that could cause injury or death. But Justice Petra HannaAdderley, in a May 20, 2022, verdict agreed with government attorneys that the three crane operators’ claim was “statute barred” and the attorney general (as minister responsible for the Meteorology Department) be dismissed as a defendant to the action. She reached this decision on the grounds that the Limitation Act, which sets deadlines by which legal actions must be brought, only gave the three crane operators 12 months from when the tornado occurred to bring their claims. This, she added, gave them until March 28, 2011, but their writs against Freeport Container Port and Hutchison Port Holdings were only filed on March 5, 2013. And it took a further year, until March 3, 2014, for the trip to add the attorney general, as minister responsible for the Meteorology Department, as a defendant. As a result, it took the former crane operators almost three years - instead of the legally-mandated one - to bring their claim against the Government. Justice Hanna-Adderley’s ruling occurred more than 12 years after the tragic tornado, which resulted in three deaths at Freeport Container Port and six injuries, two of which were described by health and safety investigators at the time as serious. It was also released more than nine years after the ex-crane operators initially filed their claim, and over eight years since the Government was added as a defendant. Their claims against the Freeport Container Port
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Brewery succeeds in $1.2m tax challenge By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net COMMONWEALTH Brewery has revealed it successfully challenged a $1.156m tax demand by the Government and is now awaiting its response to the arbitration ruling. The Kalik maker, in its justreleased 2021 annual report, disclosed that the Department of Inland Revenue had sought to claim that taxes were owing on what it described as “stock transfers” between entities in the Commonwealth Brewery group that took place in 2016 and 2017. “As of December 31, 2020, Commonwealth Brewery and its group of companies were contingently liable to the Department of Inland Revenue
COMMONWEALTH BREWERY upon assessment of intra-company stock transfers between its subsidiaries for Business Licence purposes,” the annual report said.
“The group was assessed $596,003 in 2016 and $560,403 in 2017, which required the issuance of a bank guarantee. The company successfully challenged the matter in arbitration
and is currently awaiting further response by the Government of The Bahamas.” No indication was given of when this would be forthcoming. Meanwhile, Jurgen Mulder, the vertically integrated brewer, wholesaler and retailer’s managing director, reiterated to shareholders that the company’s fully recovery from the ravages of the COVID-19 pandemic is unlikely to be completed until next year. “Although our financial results varied quite a bit from month to month, and revenue has yet to be fully recovered, we managed to post strong results for the year,” he said of the year to end-December 2021. “We were able to
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