By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama’s Chamber of Commerce president has questioned whether Hutchison Whampoa’s imminent exit from its port and harbour assets will also spark the sale of its Bahamian real estate holdings.

Dillon Knowles, newly-appointed and giving his personal rather than the Chamber’s views, told Tribune Business that the Freeport Container Port and Freeport Harbour Company have always been the Hong Kong conglomerate’s “reason for being in Grand Bahama” rather than its investments in Grand Bahama Development Company (DevCO) and other land-related assets.

As a result, in the wake of last week’s announcement by CK Hutchison Holdings that it plans to sell all its international port operations, which almost inevitably include the Freeport Container Port and Freeport Harbour Company, he queried whether it will now seek a buyer for its 50 percent equity interest in DevCO that includes Board and management control.

Speaking after it was revealed that a consortium featuring Blackrock, the world’s largest asset manager, and Mediterranean Shipping Company (MSC), Hutchison’s long-standing partner in the Freeport Container Port, are the preferred buyers for the global port interests, Mr Knowles told this newspaper that he was neither “overly excited” nor “anxious” about the deal’s implications for Grand Bahama once it is concluded.

“The question for me, though, is if Hutchison exists the Port business, which is their reason for being in Grand Bahama, will they exit the land business they are also in?” the GB Chamber president asked. “DevCo and the Freeport Development Company, which has just under 1,000 acres of land between the Container Port and the airport - the Sea Air Business Centre.

“They have been clear they have never been interested in developing any of the real estate assets. They have always seen it as a land bank. The question is: Are they going to hold it as a land bank or offload it to someone else? I cannot foresee it being part of the Blackrock deal.

“Hutchison has always said land never spoils. They’re prepared to hold it for an eternity until the right deal comes along. I’m curious whether this deal coming along will free the value of it.” Hutchison’s partner in the 50/50 DevCo joint venture is Port Group Ltd, the Grand Bahama Port Authority (GBPA) affiliate, although the Hong Kong conglomerate has Board and management control.

DevCO, which has 70,000 acres available in its development inventory, and Hutchison have frequently been criticised for “land banking” rather than seeking to further develop their extensive holdings. This, observers have argued, has hindered economic growth and development in Freeport and contributed further to the city’s decline over the past 20 years. The relationship with Port Group Ltd has also been far from smooth.

Given that CK Hutchison and its affiliates have already off-loaded the Grand Lucayan resort and Grand Bahama International Airport on the Government, and now seem set to exit their key port and maritime-related assets, a sale of DevCo and its other remaining real estate assets appears likely as this would seal its departure from Grand Bahama and the wider Bahamas.

Mr Knowles, meanwhile, predicted that Blackrock and MSC’s impending acquisition of the Freeport Container Port, in particular, will not have much impact on Grand Bahama either way - for good or bad. While Hutchison has long held the majority stake in the transhipment facility, at 51 percent, MSC has owned the remainder at 49 percent thus giving it a strong voice in its management and development.

With CK Hutchison now seemingly poised to make way, all this means is that MSC and its partners will move from minority to full control. “Generally speaking, Blackrock is not an operating entity. It’s an investment company,” Mr Knowles said. “They hold assets for financial gain, but I would imagine MSC would be the operator as MSC is currently actively involved in operating the Container Port.

“If the Container Port is acquired by this new consortium, likewise for Freeport Harbour Company. It’s a true 50/50 partnership with Port Group Ltd but with Hutchison having Board and management control. Management control would transfer over to Blackrock and MSC. And I imagine MSC would be the operating entity, not Blackrock.

“I don’t see, in any of these changes, anything significant for Freeport in either direction. Freeport will be kind of a blip on the radar with this deal because this deal is a multi-country, multi-port deal. We just happen to be along for the ride. I’m not believing there will be much of an impact.”

Both the Freeport Container Port and Freeport Harbour Company are strategic assets of significant importance given their proximity to the US eastern seaboard and major global maritime shipping lanes between the entire Western Hemisphere and Europe and Africa.

Fears have been expressed that MSC could exploit Board/management control of Freeport Harbour Company, once the deal is closed, to deny rival cruise lines and cargo/freight companies access to the facility. Bit, while MSC is fiercely competitive, it would also have to answer to Port Group Ltd and, more importantly, its Blackrock partners should it engage in practices seen as unfair or anti-competitive.

This would act as a check on such actions by MSC and Terminal Investment Ltd, its port operations and infrastructure arm that is the entity involved in the consortium. Mr Knowles, too, voiced doubts that MSC would behave in such a manner as suggested by unnamed sources in other media reports.

“The reality of it is in business you want as much business as you can get,” the GB Chamber chief told this newspaper. “MSC only has a finite amount of business that it’s going to run through the harbour. I don’t see why they would limit other people coming into the harbour. They may give themselves preferential treatment, but I don’t think it would be in their best interests to manipulate it.

“I understand MSC and Royal Caribbean were supposed to be collaborating on developing Billy Cay into a new cruise port within the harbour. They seem to have a synergistic approach to things and not adversarial.. Structures change all the time. I’m not overly-excited about this [deal] and I’m not anxious about this either. To me, it’s just part of the changing factions of the world.”

CK Hutchison, unveiling its net $17.165bn exit from international ports operations via their proposed sale to the MSC/Blackrock consortium, said the agreement involves some 43 ports spread across 23 different countries.

With operations in China and Hong Kong not included in the deal, subtracting these from all the ports listed on Hutchison Port Holdings’ website leaves the same number of facilities and countries as detailed in the statement announcing the deal. To reach the 43 ports and 23 countries number, the Freeport Container Port would have to be included in the sale but this could not be confirmed before press time last night.

The Hutchison Port Holdings’ website also denoted Freeport Harbour Company as being part of its Bahamian port operations, implying that this is also included in the sale. Blackrock, which oversees $11.5 trillion in assets and is regarded as the world’s largest investment firm, has partnered on the deal with Terminal Investment Ltd, the port operations and infrastructure arm for MSC.