The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government feels it is “almost there” in resolving the Grand Lucayan resort’s fate, a Cabinet Minister yesterday saying negotiations had reached “a good but very sensitive” stage.

Kwasi Thompson, minister of state for Grand Bahama, told Tribune Business that talks over the potential sale of Freeport’s ‘anchor resort’ property were “too close” for him to provide any specifics.

He was only prepared to confirm the involvement of Canadian real estate developer, the Wynn Group, given that its identity - and interest - in the Grand Lucayan had been exclusively revealed by Tribune Business several months ago.

Mr Thompson instead pleaded for “patience” from both the media and Bahamian public over the Grand Lucayan, indicating that the Government was talking to the parties involved every day due to the importance of the hotel’s re-opening for Freeport’s economic revival.

“We’re in the middle of trying to negotiate the deal, and for me to confirm or not confirm would really not benefit us or the persons we’re talking to,” the Minster said in response to Tribune Business’s inquiries.

“It is at a stage where we are talking to them every day. We are trying to close the deal as quickly as possible, but I cannot at this time for obvious reasons - as we are in the middle of negotiating a deal of this magnitude - be communicating the position or details of the deal to the public or the media.

“The absolute best I can say right now is that we are really in the middle of negotiations, and doing the very best to bring this matter to a close. We are trying to get the best possible deal for Grand Bahama, and we hope to do that in the shortest possible time.”

Mr Thompson was contacted for comment after highly-placed government sources confirmed to Tribune Business at the weekend that the Wynn Group, as the Grand Lucayan’s prospective purchaser, had submitted a proposed ‘Heads of Agreement’ to the Minnis administration late last week for its review.

This occurred after Tribune Business contacts familiar with developments suggested that the Government was concerned about the value of investment incentives being sought by Wynn, especially promotional subventions to assist with airlift and marketing the resort properties.

“Again, I cannot confirm or not confirm,” Mr Thompson said when this was put to him. “It is really that sensitive, and really that close... It would not be in the best interests of the deal.

“We’ve reached to a position where I think we’re almost there, and we don’t want to jeopardise how far we’ve come and where we’re at. I have no response other than to say we are continuing to talk to the interested persons, we are continuing to talk to them every day, and we are seeking arrive at the best possible deal in the shortest possible time for the people of Grand Bahama.

“Where we’re at right now is a good place, but very sensitive. I was at a meeting today on this very property. This is not something that’s on the backburner; it’s a live issue that we’re working on every day.”

The near nine-month closure of the Grand Lucayan’s Breaker’s Cay property, and much of the Lighthouse Pointe section, together with Memories subsequent pull-out has deprived Grand Bahama of more than 1,000 hotel rooms - around 59 per cent of its inventory.

The post-Hurricane Matthew hotel closures, and loss of hundreds of jobs, have had a devastating effect on Freeport’s economy and society, with some predicting that the city will hit “the point of no return” if the Grand Lucayan is not sold and re-opened by Christmas.

Several Port Lucaya Marketplace vendors have predicted that 95 per cent of tenants “will not survive another two months”, given their dependency on a resort customer base that has all but dried up.

Tribune Business understands that Wynn’s business model for the Grand Lucayan, should the purchase go ahead, would involve it acting as the ‘landlord’ and real estate owner. It would then strike deals with resort/casino brands and operators to manage the hotels and amenities.

Sources familiar with Wynn’s position yesterday acknowledged that “the Government has some questions” over the level of tax/investment incentives, and marketing/promotional subsidies, it is seeking.

However, they suggested that the prospective purchaser had yet to receive any formal feedback or response to its proposed Heads of Agreement submission.

They added that Wynn wants to complete Heads of Agreement talks with the Government before closing the Grand Lucayan’s purchase with current owner, Cheung Kong Property Holdings, Hutchison Whampoa’s property arm.

“There’s some terms with Hutchison that have to be worked out,” one source, speaking on condition of anonymity, told Tribune Business. “But nothing’s going to proceed until they get a final agreement with the Government.

“Once that Heads of Agreement is done with the Government, they’ll close. They want to iron that out, and once they do that they’ll close with Hutchison.”

Wynn has paid a deposit, the normal practice in all real estate deals, to the Grand Lucayan’s owner, to show the seriousness of its purchase intent. This has yet to reach the point where it goes ‘hard’, and can be kept by the seller if the deal goes through.

This provides a ‘narrow window’ for Wynn to conclude negotiations with the Minnis administration, although some observers yesterday suggested this was akin to “putting the cart before the horse” as the Canadian developer has yet to sign a sales agreement with Cheung Kong Property Holdings.

However, Tribune Business was told that the marketing/promotional support sought by Wynn was equivalent in value to previous government subsidies to the Grand Lucayan and its product.

One source pointed out that the former Christie government had paid the salaries of Treasure Bay casino staff for many months, and assisted the Grand Lucayan in getting cruise passengers to stay at the resort.

Besides securing the return of Memories and its Sunwing affiliate, Wynn is also understood to be talking to AM Resorts as a potential operator for the Grand Lucayan.

AM Resorts owns and operates numerous resorts in Punta Cana, Mexico; Montego Bay, Jamaica; and the Dominican Republic via five-six different brands.

“They’re a perfect fit,” one source said of AM Resorts, describing them as “a one-stop shop” and vertically integrated resort/leisure company due to their ownership of vacation wholesalers and affiliation with the Apple Leisure Group.

Many observers believe the Grand Lucayan’s re-opening should be the Minnis administration’s leading national economic priority, given that the situation has the potential to derail its long-term plans for Grand Bahama if it persists much longer.

The new government has placed Grand Bahama at the centre of its economic revival strategy, with plans to market the island to three separate tourism niches, plus attract the film/TV industry and financial services.

This, though, will all be for nought unless the current decline is arrested.