By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The British Colonial Hilton’s owners were yesterday said to be awaiting a formal purchase offer for the resort from the Chinese-state owned construction company currently building Baha Mar’s $2.6 billion expansion.

Sources close to the situation said China State Construction’s due diligence period on downtown Nassau’s ‘anchor resort’ property finished last Monday, as the British Colonial’s owners seek to bring a buyer search that began almost two years ago to a close.

“There’s an offer coming in very soon, in a week or so, to buy the British Colonial from the same people doing Baha Mar,” a source said in reference to China State Construction.

“They’ve been doing their due diligence, which ended from last Monday, and they’re ready to make an offer.”

The source said China State Construction appeared to “really be the only ones” left ready to make a serious bid to acquire the British Colonial Hilton, although at least one purchase group that had previously submitted an offer is understood to still be interested.

“The other people who were interested got fed up and walked away,” another source said. “I know the Chinese group will be concentrating on the land on Bay Street between Junkanoo Beach and the hotel.”

That refers to the six-acre site immediately to the west of the existing resort. Although identified as ideal for a mixed-use type of investment featuring a marina, retail, condo and office-type products, all efforts to develop this site in recent years have come to nothing.

Tribune Business contacts said a purchase price in the range between the ‘high $50 millions’ and ‘low $70 millions’ could be enough to secure the British Colonial Hilton’s sale, provided both parties can also agree on the terms.

With the buyer a Chinese government-owned entity, and the Christie administration desperate to secure every investment dollar it can, the Government approvals for a China State Construction purchase should be a relative formality.

“It may work out,” the source said. “The hotel is suffering from deferred maintenance. They [the owners] don’t have the funds or the desire, whereas the Chinese will go in there and make that property a gold mine.”

China State Construction has become increasingly interested in expanding its involvement in Bahamian resort development and ownership in recent months.

Apart from its $150 million investment and position as Baha Mar’s general contractor, Tribune Business revealed earlier this year that it was also the construction partner for preferred South Ocean buyer, Dr Mirko Kovats (see other story on Page 1B).

Yet its potential British Colonial Hilton acquisition may well have Bahamian political ramifications.

In keeping with the Chinese strategy of putting their surplus dollars and labour to work abroad, China State Construction would likely want to do any development at the British Colonial Hilton itself.

This would likely mean the use of Chinese labour and materials, with less of the benefits going to Bahamian contractors, workers and building suppliers.

Khaalis Rolle, minister of state for investments, said the Government had received not formal information or application on the British Colonial Hilton’s potential sale, but anticipated getting an update soon.

“Nothing has moved as yet,” the Minister said. “We’ve heard of a number of discussions taking place, multiple meetings and we’ve not got a finalised version of who the new purchaser is.

“We anticipate something is going to happen soon.”

This is not guaranteed, as several potential buyers have already walked away from the British Colonial Hilton in the past 24 months since Tribune Business first revealed the property was for sale, and who some of the suitors were.

The resort is currently jointly owned by the Canadian Commercial Workers Industry Pension Plan (CCWIPP) and Aubaine Capital, the successor entity to Swiss/UK boutique investment house, Adurion.

Their partnership, formed before the 2008 recession struck, has not been a happy one. There was a failed attempt to partner with Island Global Yachting (IGY) to develop the adjacent six acres, and then the two sides became embroiled in a dispute that went to arbitration.

Among the early bidders for the 288-room resort, when it was placed on the market, was a $74 million offer from previous South Ocean developer, Roger Stein, and fund manager Och-Ziff.

Other offers that have come and gone include an $80 million bid from the Three Musketeers group, and a bid from the developers of the Bayside area in Toronto. Another offer came from a group that had connections to the Sunset Equities vehicle that acquired the nearby Nassau Palm resort, while the Bahamian Mosko Group of Companies also expressed interest in conjunction with a Chinese partner.

Yet all seem to have melted away, leaving the field to China State Construction.