St. Maarten, Carnival sign
US $34.5M loan agreement
~ Construction of second pier to start in December ~
POINTE BLANCHE--Cruise ships Carnival Glory and Caribbean Princess berthed at Dr. A.C. Wathey Pier simultaneously blasted their horns Wednesday afternoon to signal the signing of a US $34.5 million loan agreement between Carnival Corporation & PLC and the Island Government/St. Maarten Harbour Holding Company (SHHC) for the construction of a second pier.
Construction of the 445-metre-long 21-metre-wide Genesis-class pier that will be able to accommodate ships like Queen Mary II is scheduled to begin in December. The pier will have berths for two 220,000-tonne Genesis class ships, the first of which will be christened in 2009.
The existing four-berth pier, along with the new two-berth pier, will make St. Maarten one of the largest cruise ports in the Caribbean.
The agreement signed on the balcony of the cruise terminal by Harbour Affairs Commissioner Theo Heyliger and Carnival Corporation Senior Vice President Strategic Planning Giora Israel is the first of its kind in the Caribbean. It represents the first significant investment by a cruise company in the upgrading of port facilities in which it does not have shares.
The loan is repayable in 20 years at 5.9 per cent per annum. To generate income for the port and help facilitate repayment of the loan, Carnival Corporation guarantees approximately 700,000 passenger arrivals to St. Maarten annually, while the corporation will get one fixed berth on the Genesis pier and three on the existing pier.
The passenger guarantee will ensure a constant cash flow through the US $6 per person cruise passenger head tax. The tax was increased by the Island Council in June from US $5 to US $6. The increase takes effect fully in January 2008.
Following the signing, the gathering of Carnival Corporation and port officials went aboard Carnival Glory for a celebratory lunch.
Asked by The Daily Herald why Carnival had decided to invest in St. Maarten, Israel said a partnership involving the harbour/government and Carnival was only natural, especially because eight of the company’s ships called here year-round. He called the project “a perfect enterprise” of the banking sector, Carnival and the government/port.
“Some countries just built piers. You [St. Maarten] have built a destination … with a port that is second to none” in the Caribbean, Israel said.
He said the investment in St. Maarten was not only about the money, but also about passenger satisfaction. St. Maarten is “a great port for us,” he said. He also praised the organisation of the taxis, water taxis and other amenities at Dr. A.C. Wathey Cruise and Cargo Facilities.
The investment, according to Israel, is seen by Carnival as a foundation for expanding what the island offers passengers. Expansion of the facilities means more passengers, which in turn will spark development of more activities, tours and other amenities for passengers.
Israel also said St. Maarten could expect more than the guaranteed 700,000 cruise passengers, as the corporation would expand its operations in the region. More European passengers can be expected to arrive aboard ships of the corporation’s three European lines, as the high euro is stimulating growth from that region.
Lt. Governor/harbour shareholder’s representative Franklyn Richards told the gathering at the signing ceremony the agreement fortified “a marriage” between the island and Carnival that hopefully would be healthy, steady, and successful, and would last longer than the 20-year agreement.
Richards and Israel commended Commissioner Heyliger on his vision and dreams for the port that he has worked hard to accomplish along with the harbour board and management.
Heyliger said the signing was the culmination of 2½ years of negotiations that had given him “more grey hair,” but might well be his greatest accomplishment so far in his career.
For the next 20 years, everyone on the island from the taxi drivers and merchants to the cleaners and government can expect steady revenues from the continuously expanding cruise industry, generally, but in particular, from Carnival Corporation, he said.
He and SHHC Managing Director Mark Mingo thanked the harbour team and Carnival associates for working hard to realise the project.
Carnival Corporation’s financial input is part of the US $97.5 million port expansion project. Additional funding will come from the port’s existing cash flow, funds from refinancing of existing loans by RBTT Bank for US $86 million, and other investments.
