Video: 20 Minute Interview With Aecon President

February 25, 2016

[Written by Ayo Johnson]

Aecon will likely sell its stake in Bermuda’s new airport once its completed, according to senior executive Steve Nackan.

“Aecon is a developer and a builder. Our traditional approach is to take a project from the inception/development phase, build it, get it to a steady state. At that point its very common in our business for the developers to then move out of the project and make way for long term financial investors,” he said.

“We as a company have done both where we’ve held for the long term or we’ve sold at some stage to a developer or a long term investor. its actually a natural occurrence in the life cycle of these projects and typically seen as a sign of project success when its successfully gone through the life cycle of development, build and into operations and a steady state and its time for long term institutional investors…”

On average, Aecon would hold an investment for ten to 12 years, he said.

In 2015, Aecon cashed out of a $700 million airport project in Ecuador 14 years after project inception, but just two years after the airport opened.

Nackan said he did not know why the Cayman Islands pulled out of a similar deal. “There was a change in Government. That’s what happens.”

Nackan, president of Aecon Concessions, conducted interviews with some of the island’s media yesterday.

20-minute video with guest interviewer Ayo Johnson & President of Aecon Steve Nackan

On the role of Government’s advisor, the Canadian Imperial Bank of Commerce, Nackan rejected a suggestion that it had been conflicted by acting as a “back channel” to Aecon in putting together the deal.

Nackan who described CIBC as a “back channel” in internal emails released last year under Canada’s Freedom of Information laws, said the bank had not acted as an advisor to Aecon.

Nackan, however, said that the Canadian bank would not be involved in financing the deal. “They shouldn’t be. CIBC is the Government’s advisor.”

He insisted that Canada’s version of the Public Private Partnership model was “superior” to the traditional procurement methods for large infrastructure projects or P3s as practiced in other jurisdictions.

And, despite the fact that Bermuda would have to pay 120% of Aecon’s expenses should the island pull out of the deal, there are checks in place to ensure that only “reasonable expenses” would be reimbursed.

Nackan would not say how much the taxpayer would have to fork out should Bermuda Government decide not to pursue a multi million dollar deal to build and operate a new airport.

Canadian Commercial Corporation, a Canadian Government agency, is overseeing and guaranteeing the $250 million project as the prime contractor, while Aecon, the subcontractor, will have the rights to operate the new airport for some 30 years after financing and building it. Government has also agreed to minimum revenue guarantees.

The Opposition Progressive Labour Party has fiercely opposed the arrangement saying the Minister skirted good governance legislation and that the deal could cost the taxpayer dearly and worsen the country’s balance sheet.

Government has dismissed Opposition concerns, saying it has chosen a novel procurement approach which will mitigate risks inherent in the traditional RFP competitive bidding process.

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Comments (10)

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  1. Yes they are in business to make a profit, and as they come to assist to make this Bobby Richards International airport a reality, Sorry got the name wrong. it will be in honor of the finance minister’s late father, The E.T.Richards International airport, after all it is a upgrade, so Friswell’s Hill Freddy wont be good enough for the O.B.A, and while we are at it, why not talk about the proposal of the new airport and will it retain it’s name, having the legacy of one of our greatest stalwarts of all time remembered with honor dignity and the utmost respect. That being the late Frederick L. Wade, who I think deserved the recognition, just as dame Lois Browne Evans deserved with the court building.

    So back to my point, my concern is that Aecon is investing all this money, and after the termination of the lease and pocketing millions or even billions, after 30 years, will be willing to sell it’s share, Yeah good way to go and how much then will we have to pay, or will it be passed off to another international buyer, so Bermuda will never have it’s airport back in the majority of our adult populations life time, our grand children and great grandchildren will be left top fight to regain something that should have not been taken from us in the first place.

    Thank God I am in the burial business, looks like my heirs have a lot of people to bury in the coming years.

    • Guilty says:

      Who’s the woman’s voice in the background, Why is she speaking?

  2. flikel says:

    “Aecon will likely sell its stake in Bermuda’s new airport once its completed, according to senior executive Steve Nackan”

    Sell its stake? I thought the Govt was to retain complete ownership of this airport. How much of airport will Aecon own?

    So, Aecon gets 30 years of revenue…and if complete ownership is to be returned to Bermuda, the Government has to essentially buyback Aecon’s stake?

    So Aecon get 30 years of revenue, costs (for example, electricity) are covered, a revenue guarantee, so they will never loose money and never risk anything and partial ownership….this is an incredibly sweet deal for them.

    • Informed Bermudian says:

      Truth is, we’re desperately in need of a better finance minister that can ensure we broker better deals, and make the hard decisions necessary to get this country’s finances back on track.

      Hopefully the PLP will see the usefulness in Sen. Wilkerson and somehow give her that portfolio when they get back into government (which is inevitable at this point). I’ll take her after this Richards fiasco before I take Burt and his troubled math.

      • Lois Frederick says:

        We already tried that. A reinsurance executive lawyer that wrecked Bermuda’s finances for a generation – at least, through no financial control or prudent planning. While Sen Wilkerson seems like a bright person and well spoken, much like the previous Finance Minister, Bob Richards actually has over 40 years in the world of Finance. You may not like his approach, but he was handed a bag of rocks and is trying to make the best of it, for all our of us.

    • Onion says:

      They will in-essence re-sell the debt. They’d be selling a stream of future cash-flows, not any actual ownership in the airport itself.

  3. Roger says:

    Aecon will likely sell its stake in Bermuda’s new airport once its completed, according to senior executive Steve Nackan. He went on to say “its very common in our business for the developers to then move out of the project and make way for long term financial investors,”

    This sounds like what the opposition leader, the Honourable Mr Mark Bean warn about the OBA treating Bermuda and Bermudians like a Lady of the night.

  4. The PLP Did it!?!?! says:

    This project is a sham!

    The OBA should be kicked out now! How the hell did they sign this?

  5. Evie says:

    Soooooo why is the OBA really pushing for this deal that is very bad for Bermuda and the sweetes deal for the Canadians why are we going down this road again oh yeah we really need an airport funny even if it’s the worst deal Builder Bob has made SMH

  6. Need Peace says:

    Everyone knows it’s a bad deal for Bermuda so what are you going to do about it? Tell your MPs, protest but don’t just talk about it!!