The Tribune

THE Government is today being urged to use “strong arm” tactics to ensure the Grand Lucayan’s rapid sale and re-opening, a prominent attorney warning: “Freeport will disappear otherwise.”

Terence Gape, senior partner at Dupuch & Turnquest, writes in a Page 3B column in Tribune Business that the Minnis administration has ample justification to ‘get tough’ with the hotel’s owner, Cheung Kong (CK) Property Holdings.

Expressing disappointment that the Government is not yet in position to “cut the deal” with Hutchison Whampoa’s Hong Kong-based successor, Mr Gape describes the Grand Lucayan’s relaunch as the “essential first ingredient” to turning Freeport and Grand Bahama around.

“We’ve got to strong arm them,” he told Tribune Business of CK Property Holdings. “That hotel is in the nature of an essential service in this town. Without it, the town will disappear.

“There are zero investors and zero investments. That’s quite a fact. The businesses here are just hanging on by their finger nails. Around 60 per cent are struggling to meet payroll. There’s no money, no tourist dollars. We have to get that hotel open, otherwise we might not survive.”

The impact from the Grand Lucayan’s year-long closure has rippled throughout the Freeport economy. In terms of direct effects, these have included the loss of more than 1,000 jobs; a 59 per cent decline in room inventory and reduced airlift capacity; and a more than $9 million or 62 per cent fall in year-over-year room revenue.

The indirect impact has included job losses and business closures at the Port Lucaya Marketplace; the Grand Celebration encountering difficulties in finding sufficient hotel rooms for its overnight passengers; and depopulation of Grand Bahama as persons seek work on other islands.

Explaining the effects in personal terms, Mr Gape told Tribune Business: “My law firm has been here 50 years, and if we depended on Freeport business today we’d be closed.

“We’re lucky we have a country-wide practice and international practice. Freeport used to cover all our expenses and generate 50 per cent of our gross, which covered all our costs. Now Freeport covers nothing. There’s no business.

“What do you think that means when the lawyers are starving? Most lawyers don’t have country-wide practices, and don’t have international practices. It’s dire. It’s very dire.”

Mr Gape, however, praised the Government’s decision to renegotiate the Memorandum of Understanding (MoU) agreed with the Grand Bahama Port Authority’s (GBPA) shareholder families as part of its repeal of the Christie administration’s Freeport investment incentives legislation.

The senior Dupuch & Turnquest partner told Tribune Business that while the MoU had “some good stuff in it, it has no teeth” to compel the Haywards and St Georges, plus Hutchison Whampoa, to follow through on their obligations.

He writes today that the Government needs to focus on what he terms “Holy Grail” or three commitments - to create a “world class investment promotional entity” for Freeport; that the two largest land-owning companies develop master plans within 12 months (the deadline expired in late April 2017); and that the two families would “market and sell” their GBPA equity interests.

Mr Gape told Tribune Business that it was unclear whether the Grand Bahama Development Company (DevCo) and Freeport Commercial and Industrial had met their obligations. The latter is an affiliate of the GBPA’s Port Group Ltd, while DevCo is 50 per cent owned and management controlled by Hutchison Whampoa.

Referring to DevCo, Mr Gape argued: “I make the point that Hutchison, as far as I’m concerned, is in breach of its Hawksbill Creek Agreement obligations even though they were not a party to the original agreement.

“They took over DevCo, the harbour and the airport, and they’re in bad order. DevCo should have been the engine to cause Freeport to be the first in the country, but it is doing nothing, and that is Hutchison.”

Mr Gape said that while DevCo did not exist under the original Hawksbill Creek Agreement, it was an “absolute covenantor” in the 1992 batch of Freeport-related legislation enacted by the Ingraham administration. And when Hutchison subsequently acquired its 50 per cent equity stake and management control, it became subject to those covenants.

“DevCo has never lived up to them,” Mr Gape said. “Now, under the MoU, DevCo has made further promises that I don’t know if it’s fulfilled. And the same with Freeport Commercial & Industrial.

“These people [the GBPA owners] have been running Freeport for 40 years, and Hutchison for 20 years, and the Government gives them one year to produce a master plan? It’s ridiculous. It’s ridiculous to give them the time, and ridiculous that they need the time.”

Mr Gape explained that he was making the point that such master plans for the development of DevCo and Freeport Commercial and Industrial’s landholdings should have been developed decades ago.

He added that the GBPA families appeared to have made little effort to market and sell their GBPA interest, suggesting the MoU contained “half-hearted promises”.

“That’s why I call these three issues ‘the Holy Grail’,” Mr Gape told Tribune Business. “If we get the hotel open, get it in the hands of someone solid, get some real strength into these MoU provisions, in three-five years Freeport could turn. It won’t be easy, but it could happen.”