By NEIL HARTNELL
Tribune Business Editor
A Texas oil billionaire has completed his multi-million dollar purchase of the Chub Cay resort development in the Berry Islands, its former administrator yesterday describing the property’s future as “bright”.
George H. Bishop, the 77 year-old founder and chief executive of GeoSouthern Energy Corporation, completed the deal with Scotiabank (Bahamas) within the last two weeks, potentially rescuing a development that has been in ‘limbo’ for the past five-six years.
Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and partner appointed by the bank as Chub Cay’s administrator, confirmed to Tribune Business that the acquisition had closed and Mr Bishop’s team were now in effective charge of the property.
“The deal is pretty much done and has been consummated,” Mr Gomez said, when contacted by this newspaper.
“A few housekeeping matters are yet to be attended to, but the future at Chub is bright. It’s been a while in coming, but it’s good for the Bahamas and those employed on the cay. It’s a good opportunity, and the timing is good as the economy is headed north.”
Mr Gomez declined to comment further, but Tribune Business understands that almost all Chub Cay’s existing staff have been re-hired by the new owners.
Around 42-43 persons had been employed by Mr Gomez, acting on Scotiabank (Bahamas) behalf, and this newspaper understands that 40 of those have subsequently been employed by Mr Bishop and the company he has formed to own Chub Cay.
Brian Moree, the attorney acting for Scotiabank (Bahamas) in the deal, also confirmed that the sale had closed when contacted by Tribune Business.
The senior McKinney, Bancroft & Hughes partner said: “The transaction has been completed subject to a few outstanding issues, which are still being worked on.
“But the active transaction involving the sale of the property to the purchaser has been completed.” The purchase price was not disclosed.
Tribune Business understands from other sources that the “housekeeping matters” and “outstanding issues” referred to by Messrs Moree and Gomez relate to accounting factors, plus the payment of some outstanding taxes such as Stamp Duties, real property taxes and Port Authority fees.
However, all the necessary government approvals have been received. and Mr Bishop’s purchase represents positive news for the Government - and the Bahamas as a whole - on the foreign direct investment (FDI) front.
With this nation needing all the capital investment it can get, Mr Bishop seemingly represents exactly the type of investor the Bahamas needs.
It is also a key step in reviving once-promising Family Island resort developments that faltered during the 2008-2009 recession, their developers either ‘mothballing’ them, defaulting or seeking buyers.
Re-starting them has been a major priority for the Government, and several legal and business sources have suggested that Chub Cay’s sale could spark similar deals for properties such as the former Ginn development in Grand Bahama’s West End and Walker’s Cay in the north Abacos.
Chub Cay, under the first Christie administration, was billed as the ‘anchor project’ for the Berry Islands and north Andros under its original developers, the Florida-based trio of Walter McCrory, Bob Moss and Kaye Pearson.
But Scotiabank (Bahamas) took possession of the Chub Cay project in 2009, after they defaulted on the $45 million loan they received to finance the construction build-out.
The bank then appointed Mr Gomez to act for it as Chub Cay’s administrator. He has been working with Chub Cay’s existing homeowners to maintain the property, and keep it operational, during the search for a buyer.
The project’s collapse into effective receivership had a profound impact on the Berry Islands/north Andros, especially on employment and in the construction industry, and Mr Bishop would appear to have the means to see Chub Cay reach its full potential.
It is unclear what Mr Bishop’s precise plans for the project are, as Tribune Business was unable to reach him for comment.
Prime Minister Perry Christie, though, hinted at his designs during the 2014-20156 Budget speech, when he said the Government had approved recreational fishing in the South Berry Islands Marine Reserve subject to conditions.
Referring to Mr Bishop’s acquisition vehicle, Chub Cay Realty LLC, Mr Christie said the plan was “to redevelop it [Chub Cay] as a mixed use village consisting of hotel facilities, town houses, restaurants, shops, marina and recreational fishing amenities”.
He added: “Conditions have been imposed for recreational fishing to be allowed within the South Berry Islands Marine Reserve with catch limits as set out in the Fisheries regulations.
“The developer will contribute to the cost of managing the reserve, inclusive of providing vessels and manpower to ensure proper management and oversight of the Marine Reserve.
“This project will provide scores of jobs and entrepreneurial opportunities for Berry Islands and Androsians, and become the anchor property which will attract other developers to the Berry Islands.”
Tribune Business revealed Mr Bishop as Chub Cay’s purchaser in November 2013, around the same time that he hit the headlines with a $6 billion energy deal.
An article published in Forbes magazine last November estimated Mr Bishop’s net worth as being in excess of $4 billion, after he announced the sale of certain Texas-based oil and gas interests to Devon Energy for $6 billion in cash.
While some $1.5 billion of that sum is to go to private equity giant Blackstone, Forbes reported that the remaining $4.5 billion would be retained by Mr Bishop’s GeoSouthern Energy Corporation.
Mr Bishop founded the Woodlands, Texas-based firm in 1981, having started his career in the oil and gas business in the 1970s.
Tribune Business was told that he happened on Chub Cay, and its potential purchase, by chance. Sources said Mr Bishop was passing through the Bahamas on his private yacht/boat, when he stopped at the island to refuel.
A conversation with the refuelling/marina manager informed him that Chub Cay was for sale, and Mr Bishop asked to be taken on a tour of the 800-acre property and wider island.
His interest aroused, Mr Bishop reportedly asked who the vendor was, and he was told to speak to Scotiabank (Bahamas).
Tribune Business back in 2009 detailed how Scotiabank (Bahamas) initiated legal action in the south Florida courts to enforce its rights against Messrs McCrory, Pearson and Moss, specifically in regard to the $4 million personal guarantee they gave for the $45 million loan.
The action, which ultimately resulted in Scotiabank (Bahamas) taking possession of Chub Cay, noted that the project consisted of a 20,000 square foot clubhouse, 110-slip marina and vacation villas and other residences.
The bank alleged that the original developers ceased making payments on the loan facility in July 2007, with construction also ceasing that month.
And Scotiabank (Bahamas) further alleged that, at December 2008, the Florida-based trio owed it some $44.011 million in unpaid principal, plus interest, costs and expenses.
It estimated then that a further $38.6 million investment was needed to complete Chub Cay, which to this day remains an “unfinished” project.
Messrs McCrory, Moss and Pearson had aimed to refinance their $250 million project, bur ran headlong into the global ‘credit crunch’, which dashed their prospects of success.
Mr McCrory told this newspaper at the time that after pumping $16 million into Chub Cay, they had been relying on real estate pre-sales - a market that completely dried up - to finance the remaining build-out.
Mr Bishop, though, is likely to be seen as a man who can do just that, given the considerable means and ‘deep pockets’ he has access to.