Monday, March 4, 2019
By NEIL HARTNELL
Tribune Business Editor
The best bids for the Grand Lucayan, and the government’s voluntary separation offer to its managers, will both be discussed tomorrow as efforts to resolve the resort’s future heat up.
Michael Scott, pictured, chairman of Lucayan Resorts Holding, the government-owned special purpose vehicle (SPV) that owns the Freeport-based property, confirmed to Tribune Business that it had already narrowed the initial 60 offers down to those considered worthy “finalists”.
“We’re down to considering the finalists with a view to making a series of recommendations in the next two weeks, and in a month everybody will know what the deal is looking like,” he said, declining to comment further or give additional details.
Mr Scott spoke after well-placed Tribune Business sources confirmed that the Lucayan Renewal Holdings Board was due to meet this Tuesday to examine the most credible, interesting offers to acquire a property deemed vital to reviving Grand Bahama’s resort-based tourism sector and the island’s wider economy.
Several suggested that the leading contender was likely to be the proposal by the Mexican cruise port developer, ITM, which has partnered with Royal Caribbean in a bid to both acquire the Grand Lucayan and develop adventure-based water theme parts around the resort and Freeport Harbour.
“The Board is going to look at the offers formally this week,” one contact, speaking on condition of anonymity, told this newspaper. “I expect it [ITM] will be the top one. I think it deserves to be.”
Tribune Business exclusively revealed the existence of the ITM bid last month. While other media reported the value of its proposal at $130m, this newspaper understands that figure did not include the purchase price for the Grand Lucayan or associated renovation costs which are likely to collectively total between $100m-$150m.
That means the capital investment and spend by ITM/Royal Caribbean will likely be significantly in excess of what has been disclosed so far, increasing potential worker for Bahamian contractors and other vendors.
Another source, also speaking on condition of anonymity, said: “The [Lucayan Renewal Holdings] Board is going through its final checks and interviews, but they’re down to the wire.
“That hotel is costing the Government and Bahamian taxpayer some $1m a month. It’s declining now because 130 line staff accepted the voluntary separation packages, but is still significant, so the Board is moving things along.
“It’s counting the pennies, watching things very carefully, and hopefully will be able to present the country with much more positive news shortly.” The Lucayan Renewal Holdings Board had been aiming to provide its recommendations on a preferred bidder to the Government by month’s end, with Mr Scott’s comments indicating they remain very much on track to hit this timetable.
The Grand Lucayan’s $1m per month losses are similar to the rate incurred by former owner, Hutchison Whampoa, which typically experienced annual “red ink” ranging from $11m to $20m. That, though, was achieved when all three properties were open. Just one, the 196-room Lighthouse Point, is functioning and open under the Government.
Meanwhile, Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business he will be taking the “first flight” to Freeport tomorrow to brief members of the Bahamas Hotel Managerial Association (BHMA) on the Government’s latest offer.
He revealed that the latest voluntary separation package offer had been received from Dionisio D’Aguilar, minister of tourism and aviation, on February 27, but declined to provide details on the basis he did not want to “pre-empt” the meeting tomorrow.
“I have received an offer from the minister of tourism, and I am having a meeting with the managerial workers on Tuesday morning at 8am,” Mr Ferguson said. “I’m going to Freeport on the first flight. The purpose of that meeting is to apprise them of the offer so they’d be fully aware and take it from that point.
“My role as president of the union, and as attorney, is just to advise them what the law is in terms of their benefits. It’s their decision. I don’t want to pre-empt that. The Minister indicated that was the Government’s position that has been put forward, and that he was following the law.
“I’m taking the Government’s position to them, and don’t want to do anything to persuade them one way or another. It’s a policy and posture I’ve adopted. The person that’s affected, let them decide what’s in their best interests and whether to accept it.”
Mr Ferguson confirmed that around 90 of the BHMA’s 114 managerial members at the Grand Lucayan remain interested in taking the voluntary separation packages.
The Lucayan Renewal Holdings Board initially offered the BHMA members a package worth $2.6m, before upping the offer to around $3.1m. The BHMA and Mr Ferguson, though, were seeking $4.1m, leaving a gap of around $1m.
The departed line staff have already received their funds, leaving the BHMA as the only settlement outstanding. Tribune Business understands that the Board views the BHMA talks as a “sideshow” best left to the Government and is focused instead on the Grand Lucayan’s sale.