What happened? – Guardian of Nassau

Against the strong opposition of the Progressive Liberal Party (PLP) and the concerns expressed by many, including: national reviewIn 2018, the Minnis administration purchased the Grand Lucayan Resort in Freeport for $65 million. This was $25 million more than he was valued at the time.

Michael Scott, KC, former chairman of Lucayan Renewal Holdings Limited (LRHL), admitted the sale was made out of political expediency and was not based on sound business considerations. Sale of property.

The previous administration poured millions of dollars into keeping the 198-room Lighthouse Point facility at Grand Lucayan operational. To this day, we do not know how deep a hole we are in as taxpayers.

The PLP, which took office a year ago, inherited the resort’s turmoil and canceled a seemingly nefarious deal the previous government struck with Bahamas Ports International, a joint venture between Royal Caribbean Cruise Lines and the ITM Group. property.

The Davis administration has committed to a new sales process as an urgent priority.

In May, Tourism, Investment and Aviation Minister Chester Cooper announced at Grand Bahama that the government had agreed to sell the Grand Lucayan to Electra America Hospitality Group for $100 million.

Electra has pledged $300 million to develop the property.

The day the announcement was made was hailed as a deficit day for the people of Grand Bahamas, who saw the end of the Grand Lucaya story and were given renewed hope that the impetus for economic growth was finally in place. .

It seems that the announcement, which was made with great fanfare, was premature.

Cooper announced on May 11 that it has a 60-day due diligence period and a deadline “not to exceed 120 days.”

He repeated the timeline in a correspondence to the House on May 16, reiterating that direct investments in real estate are expected to be in the $400 million range.

“…we believe the economic impact will be significant and will fundamentally change the economy of Freeport and Grand Bahamas, positively impacting people’s lives,” Cooper said.

Four and a half months after the MOU was signed, concerns have arisen among Greater Bahamians and other taxpayers about the status of the deal.

There have been several extensions of due diligence by relevant authorities and changes to the language of press releases in connection with the transaction.

In their respective statements, they ensure that the deal is going smoothly.

However, seeing is believing.

The people of Grand Bahama have suffered for a long time. They’ve heard promise after promise about Grand Lucayan and about revitalizing a long-sluggish economy.

The Minnis administration established Lucayan Renewal Holdings Limited, a special purpose company for resort acquisitions, from Hutchison Properties in August 2018.

On August 4, 2022, nearly three months after Elektra’s announcement, LRHL said Elektra America Hospitality Group “continues to revitalize the tourism industry on Grand Bahama Island.”

It also announced that both parties had agreed to a 45-day extension “to complete the necessary legal documents.”

On September 15, LRHL said it had agreed to give Electra an additional seven-day extension “to consider outstanding issues related to the sale.”

And on September 23, LRHL said that given that the due diligence period had been extended by 45 days to August 4, “this has also extended the final deadline date to November 15, 2022. ‘ said.

“It should be noted that the recent seven-day extension did not affect the agreed November deadline date.”

While it was noted that this final statement did not mention Electra and its commitment to the sale, LRHL’s Board of Directors stated that LRHL “ensures that the trustworthy plans and shared vision of the resort will be realized.” We will continue to work to do that,” he assured. We provide jobs, entrepreneurial opportunities, and strengthen Grand Bahama’s economy. ”

At the time of the 120-day earnings call in May, an individual familiar with the complexities of this type of deal told us that the deadline was too optimistic.

We have to wonder if Cooper and the Davis administration’s rush to make a big Grand Bahama announcement caused problems with the early announcement.

Hotel deals are highly complex, especially with such asset clusters, which have specialized components and many moving parts, are largely dormant and in decline, and are in dire need of redevelopment. is aware of

I don’t know what’s unfolding as negotiations and due diligence continue, and while I don’t expect answers right now, I do have questions as a tax paying Bahamian interested in the deal.

We suspect that the current situation of increasing borrowing and funding costs may have raised concerns about completing this transaction.

Is Electra America fully ready to complete the deal yet? Is this transaction fully funded? There is no indication or indication that Electra is not fully on board.

Given the multiple delays in the timeline for closing the sale, the question remains as to whether the new November 15th deadline is reasonable.

Are there any changes to the contract terms? Will the $100 million sale price be adjusted?

Are there any concerns at this time?

We also have to wonder what the outstanding items of due diligence are 140 days after the deal was announced.

There are so many vehicles in this deal. Do not fail.

Addressing Congress on May 16, Cooper assured the people of Grand Bahamas that better days would come.

“With Elektra’s commitment to invest $300 million in Grand Bahama over three years, we expect this change to be swift and impactful,” he said.

“…At Elektra, we have found partners who want to be part of the Grand Bahama community, not just inject money into the community.”

With the closing timeline delayed by a full two months from what was originally announced, we have to wait and hope for the deal to close.

The Minnis administration is to blame for its erroneous decision to foist taxpayers on this loss-making entity.

There are valuable lessons about not getting involved as an investor in asset classes that governments don’t understand or have experience managing.

After all, it’s the Bahamian people who have the bags.

As time goes on, and without a successful conclusion to this issue, there will be less focus on what the previous government did or didn’t do regarding the Grand Lucayan.

PLP is currently chairing and will be responsible for the status of this deal in the coming months.