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$225m Project Exits Freeport

photo

Kenneth Russell

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The $225 million World Mart project headed by Nassau-based investor, Ken Hutton, is making the switch from Freeport to east Grand Bahama, having been “incorporated” into the proposed $7.5 billion Blackwood Pointe Resort & Spa.

Ken Russell, the former FNM cabinet minister who is now among the principals promoting the Blackwood Pointe project, confirmed yesterday to Tribune Business that the developers had made provision to include World Mart in their plans.

“We are working along with that project,” Mr Russell said. “It has been included and incorporated into the whole make-up of things. It’s the same as Ken Hutton and those proposed to do in Freeport.”

The ex-MP indicated that World Mart and Blackwood Pointe planned to exploit various synergies and ‘feed off’ each other. The ‘trade market’, whose principals also include Bahamian investor Joe Thompson, would draw corporate and convention travelers to Blackwood Pointe, which in turn would provide the necessary hotel accommodation.

“There’s going to be a hotel set aside for marketing, conventions and so forth,” Mr Russell said. “They’ll have some warehouses like they had in Freeport.”

While World Mart will only switch to eastern Grand Bahama if Blackwood Pointe becomes a reality, Tribune Business understands it has made the move after becoming disheartened by the apparent lack of support from the Grand Bahama Port Authority (GBPA).

Despite holding several meetings with the GBPA, which involved partners such as the Chinese state-owned Beijing Construction, this newspaper was told the World Mart team found the Port’s immediate ‘show me the money’ insistence – that they instantly provide proof of financing – disconcerting.

Comment by GBPA chairman Ian Fair also indicated skepticism as to whether World Mart could deliver. The Port chief told Tribune Business only last week that the project should have started small, with more modest ambitions, like Robert Myers’ VTrade.

Mr Hutton previously told this newspaper that the project, which is designed as a trade market or buyer’s/merchant emporium, was estimated as having a $400 million annual economic impact, creating between 6,000-8,000 total jobs in Grand Bahama.

He disclosed that there would be two full-time Bahamian employees for each of World Mart’s planned 1,600 stalls, which manufacturers from Asia would use to showcase their products to potential buyers and partners in the Western Hemisphere.

Mr Hutton added that the one million square foot facility proposed for Freeport would create between 3,000-4,000 direct jobs. The project’s build-out was projected to create 600-800 construction jobs.

Meanwhile, in the case of Blackwood Pointe, Mr Russell said the developers aimed to provide the Christie administration with proof that the necessary financing was in place within the next two-three weeks.

He added that its principal developer, Kylin International, was finalising the project’s construction contract with its main Chinese contractor. And, via another of the project’s partners, Blackwood Pointe is aiming to potentially supply the entire Bahamas with much-reduced rates via a liquefied natural gas (LNG) plant.

“Hopefully, within the next three weeks, all that [financial] information will be passed on to the Government to confirm the money is there,” Mr Russell told Tribune Business. “We held a meeting this weekend to finalise preparations for that. Within the next two-three weeks, this will be finished and presented to the Government.”

Kylin is headed by Lawrence McDonough and his Chinese-born wife, some of whose family hold senior positions within the Beijing government. Their project has gone through different stages and guises, having initially targeted a $1 billion development in the Sharp Rock area of Freeport before focusing on eastern Grand Bahama.

The Sharp Rock 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 Government, 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.”

But both the Ingraham administration and Hutchison Whampoa, Devco’s managing partner, were extremely skeptical that Kylin could raise the necessary project financing. Tribune Business sources previously told Tribune Business that when Hutchison attempted to do due diligence on Mr McDonough, several details – including an address given for an office on the outskirts of Shanghai – did not check out.

This, though, has been disputed by other Tribune Business sources, who have informed this newspaper that all the details and promises given by Mr McDonough to-date – including the office address – have been confirmed and fulfilled.

While former Prime Minister Hubert Ingraham was said to regard the Kylin project as ‘pie in the sky’, Mr Russell suggested his government never gave it due consideration.

Mr Russell’s promotion of the development was one of the factors that led to his firing from the FNM Cabinet, and he said yesterday: “You can’t judge something as pie in the sky if you’ve never talked to the people. Every time the project came up, Dan Evans’ project came up, and I told them: ‘No don’t mix it up with something else’.”

Asked whether Blackwood Pointe’s ambitions, which include 2,700 rooms spread between six hotels and a cruise port, were too grandiose, Mr Russell admitted he had heard those comments.

Yet he countered: “I know the Government participants who have participated in the steering committee work on it have said: ‘You have all the ingredients for the project to be a success’.

“In Grand Bahama, if you don’t have airlift, if you don’t have cheap power, you are doomed to failure, We have put in all the things to be successful.”

Mr Russell, meanwhile, told this newspaper that Bahamian environmental engineer Keith Bishop, principal of Islands By Design, had been hired to conduct the Environmental Impact Assessment (EIA) for Blackwood Pointe.

The findings from that study could be critical to Blackwood Pointe’s prospects. The project site, which consists largely of Crown Land, is in the same area as a similar-scale development proposed four-five years ago by Dan Evans’ Beka Development. One of the many reasons that project foundered was because the water table in eastern Grand Bahama was too close to the surface, and could have been compromised by the marina.

Questioned on this, Mr Russell responded: “My philosophy is a simple one. Any environmental problems we can foresee, there’s an environmental solution to resolve it. You can’t just say you have a water table problem there, so you can’t do the project. There has to be a mitigation of the water table.”

He also confirmed that it was the “intention” of Blackwood Pointe and its Chinese LNG partner to construct such a plant in Grand Bahama, and provide energy not just to the project but the whole of the Bahamas.

“We are hoping we can get to that point where we can deal with Grand Bahama Power and BEC because we’re going to be producing power much cheaper than we are now,” Mr Russell told Tribune Business.

Comments

proudloudandfnm 5 years, 7 months ago

This just seems wierd. A mega hotel partnering up with a commercial mall? Something about this just seems wierd. If they can get it built and lucrative, ok, but with guys like Fair and Ingraham doubting and the doubt I automatically felt reading this. I guess we will see. But I have to admit, I'll believe it when I see it...

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nationbuilder 5 years, 7 months ago

It seems weird because it wont happen lol

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Puzzled 5 years, 7 months ago

Anyone reading this article seems to have the same feeling what on earth is all this verbiage about?

Try Googling "Blackwood Pointe" and World Mart. This article comes up for the former and several Bahamas hits come up for World Mart. However it is interesting that one of the pages gives a link to WorldMartBahamas.com that just does not exist except as a domain owned by 'Kenneth Hutton'

I would have thought that secrecy is the last thing that a development of this magnitude needs, especially if it is in the hospitality business. Maybe it is not exactly what it seems!

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