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Bimini Injunction Would Have Grown Developer Loss 15%

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The developers behind Bimini’s controversial cruise terminal would have suffered “severe and dire consequences”, amounting to a 10-15 per cent increase in their projected $11 million operating loss for 2014, had the Supreme Court blocked its construction.

Documents filed with the court by Genting’s Resorts World Bimini affiliates, and their RAV Bahamas partner, alleged that any delay to completing their cruise terminal and jetty would “likely result in a 10-15 per cent reduction in revenue and EBITDA”.

Resorts World’s own financial projections for its Bimini SuperFast cruise cruise ship show it incurring a $10.839 million operating (earnings before interest, taxation, depreciation and amortisation) loss next year, based on net revenues of $44.189 million for the full year.

Based on its own estimates, the Bimini SuperFast cruise service would have suffered between a $4.4 million to $6.6 million reduction on its projected revenues, and $1.1-$1.65 million increase in its operating loss, had a Supreme Court injunction been issued.

Happily, for Resorts World and RAV Bahamas at least, their fears of financial armageddon have proven unfounded - at least for the moment.

That is because Justice Hartman Longley last week refused to grant Bimini Blue Coalition, the environmental activist group, the injunction they were seeking to stop all construction work on the Bimini cruise terminal until their Judicial Review action was heard (see other story on Page 1B).

In common with most start-ups, Resorts World is forecasting that the Bimini SuperFast will suffer an almost-$15 million operating loss for the 2014 first half, before hitting the ‘break even’ point in the third quarter.

The company’s Miami-Bimini cruise service is then projected to move into the black in the 2014 fourth quarter, producing $3.653 million on revenues of $17.812 million for the three months to end-December.

While the projections are designed to show the extra damage that would have been inflicted had the Supreme Court ruled in favour of the injunction application, some observers may also wonder whether they provide further evidence of Resorts World’s need for its recently-banned night cruises.

Tribune Business revealed last week how US Customs and Border Patrol’s (CBP) decision to prevent the Bimini SuperFast’s night sailings, due to alleged immigration law violations, had put the entire project - including the Bimini sailings and Bimini Bay Resort - “in peril”.

Meanwhile, Zidney Brodie, RAV Bahamas vice-president, alleged in an affidavit that the extra $3.9 million construction crew demobilisation/mobilisation spend, which would have been incurred had work stopped, was “a fraction of the financial losses” the developers would have sustained had the injunction been granted.

Noting that Resorts World has invested $13.703 million to-date on the cruise ship terminal project, Mr Brodie had alleged: “If the injunction applied for by the applicant [Bimini Blue Coalition] is granted, it will have severe and dire consequences on the company.

“The cost of demobilising the team of contractors presently overseeing and carrying out the construction of the cruise ship terminal has been conservatively estimated at $1.2 million, and in the event that demobilisation is required, the company would have to pay a further $1.2 million to remobilise the construction teams and equipment on the discharge of the injunction.

“Consequently, the cost of demobilising and mobilising will be an additional $2.4 million,” Mr Brodie added. “With respect to the pier, the company would face demobilising and remobilising fees and expenses of $1.5 million.

“The combined costs of demobilisation and remobilisation of the construction teams for the terminal and pier will be approximately $3.9 million.”

These costs, Mr Brodie alleged, “only represent a fraction of the financial losses” that Resorts World Bimini would have incurred had the injunction been granted.

He added: “The immediate completion of the cruise ship terminal and related facilities are of extreme significance to the success of the resort and the casino.

“The resort’s revenue stream for the 2014 calendar year includes projections that depend directly on the completion of the terminal.

“The granting of an injunction in the terms proposed will have tangible and measurable effects on a wide range of the income-generating streams, including but not limited to occupancy rate, ticket revenue, cabin revenue, food and beverage and casino revenue,” Mr Brodie said.

“Further consideration is the loss of goodwill and market share that will be directly attributable to the delay in completing the cruise ship terminal.”

Resorts World is projecting that it will sell a total of 393,491 tickets for the SuperFast in 2014. Apart from $41.317 million in ticket revenues, it will also earn $6.527 million and $3.35 million in cabin and food and beverage income, respectively.

With over $6.5 million forecast to come from on-board gaming, the Bimini SuperFast’s total 2014 gross revenues are pegged at more than

$58 million. With more than $14 million given back in complementary hand outs, net revenues come in north of $44 million.

This will take some time to translate into profits, with the Bimini SuperFast suffering $9 million and $6 million operating losses for the 2014 first and second quarters, on revenues of $5 million and $7 million, respectively.

The vice-president of RAV Bahamas, a subsidiary of the Miami-based Capo Group, Bimini Bay’s original developer, said the cruise terminal and associated jetty were vital to the visitor experience when leaving/embarking the cruise ship.

Implying that Resorts World’s $150 million hotel expansion would not succeed without the controversial terminal and jetty, Mr Brodie said: “The single most important motivating factor leading to the direct investment in North Bimini by the developers of more than $100 million was the approval granted by the Government of the Bahamas for the construction of the cruise ship terminal, pier and related facilities that would facilitate the ferrying of the resort’s and casino’s customers to and from South Florida.

“The resort is being marketed as a world class resort and casino, and customer satisfaction is of paramount concern to the resort. Any prohibition placed on the developer’s construction of the Government-approved cruise ship terminal will occasion severe and diverse financial losses to the resort and casino.”

The 4.5 acre cruise terminal, and 1,000 foot jetty, are designed to eliminate Resorts World’s use of smaller boats to ferry passengers between the Bimini SuperFast and land.

However, the plans have provoked an outcry from both environmentalists and some Biminites, who have argued that the projects will endanger top dive and fishing sites, plus key marina habitats.

Mr Brodie alleged that Resorts World Bimini and RAV Bahamas had engaged in an “intentionally vigorous programme of consultation” with the Government over every aspect of the cruise terminal and jetty.

He said “more than three dozen” meetings over the cruise terminal had been held with various government officials between February 2013 and November 2013.

Comments

BiminiHomeowner 4 years, 9 months ago

Guess how many meetings the Government and these Developers had with Biminites and local stakeholders about the pier before they had begun construction?

Zero.

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