October 02, 2012
Airport executives have received the final "tranche" of financing for Nassau's airport redevelopment, allowing construction to begin on the final phase. Chris Ryan, the chief financial officer Nassau Airport Development Company (NAD), said the final $90 million of the $225 million debt agreement will essentially pay for phase three and the Domestic and International Departures building. This batch of cash is the final financing hurdle for the $409.5 million redevelopment of Lynden Pindling International Airport (LPIA).
The project, which began five years ago, is now ready to conclude phase two - the 226,000-square-foot International Arrivals Terminal - sometime this month. "We are proud of a truly public and private partnership," Ryan told Guardian Business. "It was put in with no government guarantee. And yet it is government owned assets. The investors in the financing are basing their decision purely on the attributes of the airport itself.
With that in mind, The Bahamas looked to be, in general, a good place to invest." Indeed, the unique financing model at LPIA made the much-needed infrastructure improvement possible. The government is now grappling with rising levels of debt, high unemployment and narrow streams of revenue. Top rating agencies are watching government expenditures and efforts to cut costs with keen eyes from afar.
Ryan told Guardian Business that the airport redevelopment, the largest public/private venture in the history of the country, could serve as a model for future projects. "I would hope it can be duplicated," he said. "It is a good way to move forward. It reduces the government's need to borrow. You use the attributes of the project itself to pay for it." Stewart Steeves, the CEO of NAD, called the final tranche of financing "significant" as the project moves forward with terminal build out.
"Over the past five years, we've worked closely with our bakers and investment team to determine the best strategies to secure proper funding for a project of this magnitude," he said. "We're proud of what we've delivered so far and extremely pleased with the public/private partnership formed between our management team and the Government of The Bahamas." Steeves also noted in a statement that $877 million had been raised in total to fund the redevelopment through six transitions, including both financing and refinancing.
The approach used a combination of senior debt and subordinated participating debt to facilitate lower rate increases. Ryan told Guardian Business that NAD will seek to recoup these loans through fees at various levels, including passengers fees both domestically and internationally. In fact, the financing structure depends on growing commercial revenue while also remaining competitive. Fees for passengers coming in and out of LPIA are posed for another increase in October 2013, just prior to the opening of the Domestic and International Departures building.
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