By KHRISNA RUSSELL

Deputy Chief Reporter

krussell@tribunemedia.net

THE Minnis administration stepped away from the Wynn Group’s proposal for the Grand Lucayan in Grand Bahama because its CEO Paul Wynn wanted extraordinary concessions, according to Prime Minister Dr Hubert Minnis, who revealed that deal would have cost the government $159.65m.

Those concessions featured discounted electricity rates and permission to employ hundreds of foreign workers, including some without work permits, among other things, he told Parliament yesterday.

Dr Minnis noted the cost of this would have been “substantially” more than the $65m his administration will now pay to temporarily own the hotel. However, opposition parliamentarians noted in their speeches that the $65m far from captures all the costs associated with acquiring and operating the resort, with Exuma and Ragged Island MP Chester Cooper “conservatively” putting the overall cost at $100m.

Dr Minnis said Mr Wynn’s requests earlier this year made it clear the only option was for the government to purchase the resort in Grand Bahama.

He said of the Wynn Group’s requests: “I don’t want to say where I told them to go and how deep, but the government made it clear, Mr Speaker, that the requested concessions could not be agreed.”

In his speech, Dr Minnis said in July Mr Wynn asked to be given a 20 percent electricity discount rate, permission to employ 420 non-Bahamians for work on the project and an ability to have 15 percent pre-approval on non Bahamian employment without the need to apply for work permits.

He also explained Mr Wynn wanted to be exempt from paying any increase in taxes along with an annual marketing subsidy of $750,000, no casino taxes and a commitment from the government to either buying or building a new airport within two years.

Further, Dr Minnis said the government would have also had to agree to pay Mr Wynn for any losses he may have incurred with a guaranteed profit of seven percent.

The prime minister made these revelations in parliament among several others yesterday as the government by way of a resolution seeks to borrow $35m to complete the purchase of the resort.

Prior to the May 2017 general election, Dr Minnis said Mr Wynn, a Canadian developer, entered into a letter of intent with Hutchinson Whampoa – the Lucayan’s outgoing owners – with the intent to purchase the properties for more than the price the government will now pay.

At the time, Mr Wynn asked the government to pay them $2m 60 days after closing; $8m per year for the first three years for property subsidy; another annual subsidy of $7.2m for the following two years; and a $1.5m casino subsidy for five years.

Another $7m was also requested for three years for an airlift subsidy, along with an agreement for Most Favoured Nation status.

“While the Progressive Liberal Party announced a letter of intent during the 2017 general election campaign they were not able to move past this letter of intent prior to the election,” Dr Minnis told parliamentarians yesterday.

“They were also unable to secure confirmation on the operators of the hotels.

“Days after coming to office my government was confronted with the reality that if the sale of the hotel was not completed, Hutchinson would close the resort”.

Dr Minnis said his government immediately began to communicate with Paul Wynn and his representatives, pointing to communications from as early as May 22, 2017.

After several months of negotiations with Mr Wynn and Sunwing, he said it was proposed in August 2017 the government should agree to pay millions in subsidies in order for the Wynn Development to complete the deal with Sunwing as operator.

Those concessions included Wynn Group landlord support in the sum of $8.5m, $9m for Sunwing Group’s 744-room subsidy and Canadian Airlift, $1.43m in AM/Wynn Group Subsidy and $4m for a USA Airlift programme operated by Sunwing.

“This amounted to $22,930,000.00 per year for the first five years and $9m for the next five years. If the government agreed we would be paying a total of $159,650,000,” Dr Minnis said, “and all this without the government having any ownership in the hotel.

“This was not acceptable to the government.”

Dr Minnis said the government began discussions with Hutchinson directly to purchase the hotel in late 2017, and following this, he informed the country the government had made an offer to purchase. By this time, he said the government has been successful in bringing the purchase price down significantly.

“However,” he continued, “before the government signed a letter of intent with Hutchinson, Paul Wynn re-emerged and requested that the government partner with him in the purchase at a reduced price, with equity interest being granted to the government and a reduced amount of government subsidy payments.

“After further negotiations, aided by the government, Paul Wynn executed another letter of intent with Hutchinson dated in January 2018 this time with a purchase price of $65m.

Dr Minnis said: “My government immediately continued discussions with Mr Wynn on a heads of agreement, which would include the purchase, development and renovation, and tourism plan for Grand Bahama. Over the next few months, the government continued detailed and complex negotiations on airlift, the government’s equity interest, development plans, renovation costs, work permits and other items.”

He said in June 2018 the government and Sunwing drafted a tourism support agreement, but the government would not agree to these terms.

In July 2018, negotiations with Paul Wynn and another operator continued.

At this point, Dr Minnis said there was a heads of agreement, but after Mr Wynn was given an absolute deadline to complete the deal he then presented a changed document. The concessions there in were rejected by government.

“When the total financial value of the concessions being requested for the initial 10 year period exceeded the acquisition price plus the estimated cost to renovate the property, the government’s decision on how to proceed on the Grand Lucayan became clearer,” Dr Minnis said.

Seemingly addressing criticism that this process was not transparent, the prime minister said: “Let me offer a general note here. Transparency is essential for good governance. Still notwithstanding the cries for information to be made public during negotiations there is a need for confidentiality.

“This is the case, whether one is discussing matters of foreign policy with foreign governments or negotiating with prospective investors, whether domestic or foreign.”

When it is all said and done, Dr Minnis said the purchase of the hotel was about saving and repositioning Grand Bahama.

He said: “Today is about more than saving 400 jobs. Our greater mission is to create 1,200 direct jobs and hundreds of indirect jobs. Today is about creating opportunities for entrepreneurs, taxi drivers, restaurant owners, and straw vendors. A new beginning for Grand Lucayan will be the catalyst for tourism and economic growth for Grand Bahama.

“Indeed, the Ministry of Tourism has developed a comprehensive plan for Grand Bahama to be a new destination unique from other islands.”

“The umbrella effect of our destination’s robust marketing thrust will prove to be far reaching in its impact. Over a relatively short period of time our efforts will be felt in all islands of our archipelago, especially Grand Bahama,” Dr Minnis added.

Last night, Deputy Prime Minister and Minister of Finance Peter Turnquest also emphasized what he said are the catastrophic consequences of allowing the Grand Lucayan to close down.

The resolution was passed shortly after 9pm last night.