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$1bn Project Eyeing Revival

By NEIL HARTNELL

Tribune Business Editor

EFFORTS are being made to revive a former $1 billion resort project cited by ex-Prime Minister Hubert Ingraham as a key factor in firing his then-minister of housing, Ken Russell, Tribune Business can reveal.

Multiple sources have informed this newspaper that Lawrence McDonough, who together with his Chinese-born wife submitted the Sharp Rocks Resort proposal to the Bahamas Investment Authority (BIA) in 2010, has returned to Grand Bahama with talk of reviving the project - albeit on a smaller scale.

Tribune Business was also told that Mr McDonough had been seen on numerous occasions in the company of former Grand Bahama Port Authority (GBPA) chairman Hannes Babak, who was a major supporter of the new government during the 2012 election campaign.

Mr Babak, when contacted by this newspaper, effectively confirmed that Mr McDonough had been back in Grand Bahama in recent days and weeks, but downplayed any attempt to revive the Kylin proposal, saying the latter was "just checking things out".

He did not comment on suggestions that he was working with Mr McDonough to revive the Sharp Rocks proposal, merely saying: "I don't know about it and can't comment on it. I know him [Mr McDonough] from three years ago. I saw him and know him from three years ago. I just think he's checking things out."

Ian Fair, the Grand Bahama Port Authority's chairman, told Tribune Business that he had received no revised proposal from Mr McDonough to-date, saying: "Nothing's coming across my radar screen." This newspaper understands that the same position is also true of the Grand Bahama Development Company (Devco).

These two entities are crucial to any prospect of success that the Sharp Rocks project, proposed by Mr McDonough and his wife as the owners of Kylin International Group, has. The development, as originally conceived, was contingent on acquiring 2,000 acres, at a purchase price of $100 million, from a combination of Devco and Port Group Ltd, the latter being the GBPA's sister company and affiliate.

A copy of the original 2010 Kylin submission to the BIA, which has been obtained by Tribune Business, talked of constructing five luxury hotels, a cruise ship port, Blue Flag Marina, and gaming, retail and restaurant facilities.

"Kylin will invest more than $1 billion in the physical development of the resort," the submission said. "It is anticipated that the resort will employ over 5,000 staff.

"Kylin has negotiated a construction loan commitment in the amount of $1.5 billion from Beijing Construction-Engineering Group. While an agreement in principal has been reached, the loan commitment is contingent upon the approvals of the Port Authority and Government of the Bahamas."

Former Prime Minister Ingraham's firing of Mr Russell as his housing minister was at least partially linked to the latter breaching collective Cabinet responsibility by continuing to push the Kylin proposal when it had been rejected by the Government.

The main concern with the Sharp Rocks proposal, Tribune Business can reveal, was Kylin's ability to put in place the necessary project financing. Both the Government and Hutchison Whampoa, as a 50 per cent Devco shareholder with management rights, were both said to harbour reservations on the issue.

"Devco met with them [Kylin] two years ago, and they didn't have the horsepower to do it then," one informed source told Tribune Business. "The problem with Kylin so far is that they showed no ability to raise any financing."

In particular, Hutchison, as a Hong Kong-headquartered conglomerate with numerous contacts in China, was said by sources to have been unable to uncover much information on Kylin, despite doing extensive due diligence.

Kylin's 2010 proposal suggested that more than 6,000 construction workers would be hired to complete Sharp Rock's construction over a 24-28 month period.

"The construction of Sharp Rocks Resort will generate nearly $1 billion in construction spending over a 24-28 month period from July 2010 through August 2012," the proposal promised.

"It is anticipated that many of the materials and services will be procured through the local economy, and of that $1 billion in construction, nearly $400 million is anticipated to directly remain in the local economy."

Pledging that Sharp Rocks would create 5,165 full-time jobs, Kylin said this alone would generate an $80 million economic impact for Grand Bahama.

"In addition to the jobs created directly by the resort operations, it is estimated that another 2,000 jobs will be created, enhanced or improved by the resort operation," the Kylin document read.

"Goods and services from the island are anticipated to be crucial to the operation of the resort, and it is anticipated that the resort will generate a minimum of $20 million in revenue on a yearly basis through its operations unrelated to payroll."

However, sources briefed on Kylin's revised plans, described them as "scaled down from what was really envisaged. It appears they're now just doing a standalone cruise ship port and high-end hotels".

Comments

spoitier 2 years, 3 months ago

It looks like Mr. Fair job is in jeopardy, if these guys believe it is more important to talk to a former employee vs the new employee.

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concernedcitizen 2 years, 3 months ago

is this another Bobby Ginn ,ghost town coming

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Mayaguana34 2 years, 3 months ago

SHOW ME THE MONEY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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