Prime Minister Dr Hubert Minnis speaks in the House of Assembly. Photo: Terrel W Carey/Tribune staff
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.
Comments
BahamaPundit 5 years, 7 months ago
This deal is a complete fiasco!!! Minnis must go. Vote of no confidence. This deal could easily lead to a further downgrade. Minnis must resign. HE MUST GO!!!
TheMadHatter 5 years, 7 months ago
“I don’t want to say where I told them to go and how deep, but the government made it clear, Mr Speaker,"
Right on Daddy-O !! Chase them crazy baldheads outta town!!!
BahamaPundit 5 years, 7 months ago
It is now reported the deal will cost double - $124m. An obvious fraud on the Bahamian people. Blatant dishonesty and theft of VAT funds. Minnis is PLP 2.0.
John 5 years, 7 months ago
This sounds more like a divorce decree rather than the government purchasing a hotel from an owner who was desperate to get rid of it. " the inventory, open or unopened, used or unused is not included in the deal, not even the dishes? Who buys a hotel that is partially operating under those terms. Minnis seem to have a negotiating team that was weak and came across as being more desperate to purchase the hotel than the Chinese were to sell it. In business, you don't get what you deserve. You get what you negotiate!
BahamaPundit 5 years, 7 months ago
The hardest part for me to swallow is just how painful 12% VAT has been (I mean FKing painful, tear your eyeballs out painful!!!) and then to see this fool just throw my blood sweat and tears into a China man's lap without a second thought.
BahamasForBahamians 5 years, 7 months ago
Minnis Must Go!
John 5 years, 7 months ago
It was more disheartening and unbelievable that after Hutchinson has got more than double the value of the Lucayan property, they still sneak in at night and try to t'ief the people tings. What type lowlife, hoggish animals they must be. What has Hutchinson done, as a coporate citizen for the people of Grand Bahama ever? Do they offer scholarships, build bus stops, anything? Hope the pm and the government remember their stinginess and heartlessness when time to negotiate with them again,
bogart 5 years, 7 months ago
These crises situations...just dont start overnight.....they go back for some time....sometimes some say well the last set intentionally run tings bad.......leaving plenty debts bills for the next winner of thd elections....to catch hell dealing with....an pore people VAT..increase to clean up their mess.... ..Sad thing ....most of the same people from the last go round now on the other side.....but guess who gets the brunt of the blows.........while the former big shots looking o.waiting their next go round at getting elected thinking up some clever slogan......those in the bureaucracy responsible for the demise of GB....needs to be ....held accountable...people who been getting paid salaries for the state GB was left in needs to be accountable....mudda tek sic dred.....
TalRussell 5 years, 7 months ago
Comrade PM ended up abusing PeoplesCreditWorthiness buy old from Pindling era governing days which is pricey way over-valued, lousy investment, empty paying guests, hurricane damaged, poorly managed hotel property and in process told foreigner investor to go stick his proposition up he ass... and still Minnis and KP - still didn't get ownership to rolls toilet paper - including rolls toilet paper done in use on toilets paper holders. (Not making this up }.
DDK 5 years, 7 months ago
Truly amazing, Comrade! Truly amazing! If that's a grand plan, can you just imagine a small plan? Heaven help us all!
bogart 5 years, 7 months ago
ASSET STRIPPING ...thank goodness Roc wid Doc step right in ...... aint gon get caught ...!!!!...Roc eid Doc needs to take on the Finance job...an Security...an...an....Health....an..an...an..Minister of Grand Bahama too......post office......? see tribune Business Tuesday,October31,2017 "Gov't pays '3x' value of BOB's toxic loans Taxpayer pays $162m for $49m 'bad credit' 55% of stricken bank's loans non-accrual * Gov't accounts for 37% of total deposits" ............ see Nassau Guardian Section B Friday, October28, 2016 "Resolve loans were only worth $22.5M"
Alex_Charles 5 years, 7 months ago
Can we the tax payers ever catch a break?
birdiestrachan 5 years, 7 months ago
doc gone to New York and the aide to his wife gone too. A good time is had by all. Good going doc . and very good for the peoples time voters. especially the Grand Bahama ones.
TalRussell 5 years, 7 months ago
Former prime minister Papa Hubert, could very well have projected ahead about a Minnis and KP governing administration while on the 2017 general election campaign trail- launched a bold attack about how the PLP government had collected over $1 billion in VAT revenue since 2015, while the country’s debt continues to rise. How the PLP been squandering your money, that’s the reality and called for investigation into where all the money gone. When asked his opinion where all VAT revenues gone - Papa Hubert said, next week vote red shirts candidates cause if you reelect the PLP - you will never find out where $ 1 billion went. All the PLP will do is squander even more your money. { No need make up fake news about Minnis and KP, now is there - when you can just turn true and proven trusted source likes Papa Hubert }. Dying learn what Papa Hubert really thinks about the sale Lucayan hotel that has written in Purchase Agreement that it did not include the toilet paper - unopened and opened roles shi# paper.... when a average ordinary negotiation IQ 26, would have gotten the Chinese to at least allow guess something soft wipe their asses.
ThisIsOurs 5 years, 6 months ago
The most strange thing about this is he spent more time speaking about an outrageously bad deal he didn't take as opposed to why he accepted the outrageous terms of the deal he did take. One has nothing to do with the other in the what the hell did you sign landscape. They've been using this tactic for quite a while...well, you don't want to be like Haiti! 12% VAT Looks great!!, gee, that equipment burning up at BEC will only cost us 35m we didn't plan for and don't have instead of 100m wed thought originally, what a great deal!
Did you see how the goal post of this purchase changed from saving the people jobs to now creating jobs? You have nothinnngggg! as Mr Wonderful from shark tank likes to say. Whenever they speak, listen to the worst case scenario they give, well we're doing X because we don't want to get to Z. Z is exactly where they plan to go. Cue the list of FNMs from KP and Kwasi constituencies who will soon be employed at the hotel . The "Lucayan 52 week program"
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