By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to use the 2025-2026 Budget to clarify the “ambiguity” surrounding the Grand Lucayan deal and whether it has received the full $120m purchase price.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business that he hoped the Budget will “reflect the reality” of the deal with Concord Wilshire and confirm whether the resort’s sale has actually closed or if it was just a ceremonial Heads of Agreement signing with more work needed from both parties.

Well-placed sources, speaking on condition of anonymity, told this newspaper that the sale of the Grand Lucayan’s physical resort assets and associated real estate was completed last Wednesday just one day before the Heads of Agreement signing. However, this was never publicly confirmed by the Government, and it is thought that the full purchase price has yet to be received.

Mr Bowe, meanwhile, argued that there needs to be greater clarity around the $120m sales price given that “no commercial enterprise is going to pay” that sum for a dilapidated, worn down resort property that it will largely or completely demolish. As a result, he suggested that the figure “may be including” some of the Government’s own spending commitments related to the deal.

And, with the Miami-headquartered developer pledging a near-$1bn investment to transform the Grand Lucayan, the Fidelity chief called for the upcoming Budget to “be more candid” on the “dollar value” of Bahamian taxpayer commitments such as the tax breaks/concessions granted to the developer as well as spending on required infrastructure upgrades such as Grand Bahama International Airport.

“To be honest, there’s a lot going on that the Budget should reflect,” Mr Bowe told Tribune Business. “There was a big announcement in Grand Bahama, and there’s still some ambiguity as to the status of the agreement, meaning is it a sales and purchase agreement already offered and executed?

“One Cabinet minister suggested there was money in the bank, but all other communications said it had got to the sale and it was not billed, if you will, as the signing of a conveyance taking place. I would expect the Budget to reflect the reality, meaning that - if indeed a sale was consummated - the money is built into the outturn for the 2024-2025 fiscal year.

“That’s the first indication this is not just a Heads of Agreement with conditions that must be met on both sides, and there is still a significant amount of work to do.” Mr Bowe also questioned whether the Government’s repeatedly-stated faith that it will meet its full-year deficit target of $69.8m, despite incurring more than $400m worth of ‘red ink’ during the first seven months, was based on this sale.

“If there was an expectation that the Budget projections would be met by the sale of assets that could have been communicated, even if the asset was not finalised or defined,” he added. “There doesn’t need to be this cloak and dagger aspect that we don’t know.”

As for the $120m sales price, which is some 84.6 percent higher or almost double what the Minnis administration paid to acquire the Grand Lucayan in September 2018, Mr Bowe argued that this figure - and the increase - need to be better explained given that it creates the impression Concord Wilshire is paying a premium for a resort it largely plans to demolish.

“There needs to be disclosure with the sales price,” he told this newspaper. “No commercial enterprise is going to pay $120m for assets that are probably worth a fraction of that. That indicates the sales price may be including certain commitments on the part of the Government for its own expenditure, meaning it’s a bit out of the woods.

“The net price for the actual property, what does that reveal itself to be?” The Government is thought to have been subsidising the Grand Lucayan’s operations by between $1.2m to $1.5m per month ever since it acquired the resort from CK Property Holdings, Hutchison Whampoa’s real estate arm, six-and-a-half years ago.

Some $17.882m was used for this purpose during the 2022-2023 Budget year and, during the first nine months of the following fiscal period, $16.632m out of the $17m allocated was spent on subsidising the Grand Lucayan. A further $17m was estimated for the current 2024-2025 fiscal year, meaning that the $120m purchase price is unlikely to fully recoup the Government’s holding costs pegged at $63m.

“I would expect it [the Budget] to be more candid in terms of any expenditure versus the sales price,” Mr Bowe added. “It’s not to suggest that, by any means, the sales price is a gain. In accrual accounting, it would just be the recovery of assets used to pay for it. 

“There needs to be greater articulation on that transaction because it’s such a large factor in Grand Bahama’s progress. There’s a lot of enthusiasm. You need a lottery ticket to win the lottery, and we’ve certainly gotten to that first stage of having the lottery ticket. We need to be clear on what the dollar value of the commitments are and what commitments the Government has made.”

Mr Bowe expressed hope that these commitments will be disclosed in the Budget, acknowledging that Concord Wilshire will not make such a sizeable investment without “not just assurances, but concrete commitments that the Government will do certain things” such as ensure Grand Bahama’s airport can accommodate extra airlift when required.

He pointed out that Atlantis did not undertake its Phase III expansion on Paradise Island without the Government’s commitment to enhance and upgrade Lynden Pindling International Airport (LPIA). The Grand Lucayan sale includes the 56-acre beachfront resort along with the adjacent 160-acre Reef Golf Course.

The developers say the revived property will feature seven major resort components, including three new hotel buildings and branded timeshare units. Other features include a 35-acre cruise destination open to all cruise lines and guests, a 25,000 square foot indoor/outdoor casino, the conversion of the Reef Golf course to a 160-acre Greg Norman signature golf course, and a 16-slip mega-yacht marina.

Construction is expected to begin within 90 days of obtaining the necessary permits and approvals. The project will be rolled out in phases, creating 1,320 construction jobs and 1,750 permanent positions once the resort is fully operational.