By NEIL HARTNELL
Tribune Business Editor
The Grand Lucayan’s workforce will likely be cut by 50 percent through a voluntary separation (VSEP) exercise to launch around month’s end, the resort’s chairman revealed yesterday.
Michael Scott, chairman of Lucayan Renewal Holdings, the Government-owned special purpose vehicle (SPV) that controls the resort, said the process of structuring separation packages for around 200 of the current 423 employees will begin “in earnest over the next two weeks”.
He told Tribune Business that the Minnis Cabinet had agreed to the terms for closing the Grand Lucayan’s $65m purchase with Hutchison Whampoa, with final payment and the exchange of documents the only matters still outstanding.
Mr Scott added that Colliers, the Canadian-headquartered real estate firm that was appointed to oversee Baha Mar’s sales process, will be hired to perform the same function in relation to the Grand Lucayan.
The Lucayan Renewal Holdings chairman said a “teaser”, designed to whet buyer appetite and ignite interest in the resort, will be launched today ahead of the release of a full offering memorandum containing all necessary due diligence information.
An appraisal of the mega resort’s market/real estate value, an essential ingredient in any sales process, is also being targeted for completion by October 20 as Mr Scott and the Government seek to make good on promises of a rapid sale.
With the Government having approved final terms with Hutchison Whampoa, he said the Lucayan Renewal Holdings Board is now free to focus on its main objectives - charting the swiftest exit route for the Minnis administration, and finding a buyer with the capital, connections and visions to transform the resort and surrounding area into a sustainable, profitable destination.
“We’re waiting for the Treasurer to pay out the final closing balances, and are waiting for the documents to be released from escrow and passed to me or my operatives in Freeport,” Mr Scott told Tribune Business.
He explained that these papers include the conveyancing and title documents for the Grand Lucayan, and insurance assignment, which Hutchison Whampoa has retained until it receives the $20m due on closing and all other outstanding monies.
With the acquisition’s completion virtually assured, Mr Scott said he was already looking to the next phase. “I’m hoping to be in position by the end of the month to launch the VSEPs,” he told Tribune Business.
“We have to reconcile their [trade union] list with our expectations as to what it’s going to take to run and properly equip the property with management and line staff for the next three to six months,” he added.
“That process will proceed in earnest over the next couple of weeks, and hopefully we will effect it by the end of this month or the beginning of next month.”
Mr Scott said “we’re probably going to reduce by half” the Grand Lucayan’s workforce, adding that worker and union expectations about the level of payout on offer will need to be matched with “what the law requires us to pay in terms of severance packages”. The SPV’s Board will also have to work out which workers are essential to operations, and cannot be allowed to leave.
The voluntary downsizing is unlikely to be opposed by the trade unions representing the Grand Lucayan’s staff, both of which have indicated that many members - possibly up to the 50 percent level targeted by Mr Scott - are willing to accept a severance package if the financial terms are right.
Obie Ferguson, the Trades Union Congress’s (TUC) president, previously told Tribune Business that feedback received to-date indicated that “a sizeable number” of Bahamas Hotel Managerial Association (BHMA) members were willing to leave.
The BHMA represents middle management staff, while the Commonwealth Union of Hotel Services and Allied Workers covers line staff. The latter and its president, Michelle Dorsett, have expressed similar sentiments to Mr Ferguson.
Downsizing the Grand Lucayan’s workforce to more appropriate levels for a 196-room property, and cutting costs, will help to make the resort more attractive to any potential buyer in the upcoming sales process.
“We have a teaser which is being circulated tomorrow,” Mr Scott revealed of the purchaser search’s kick-off. “We are going to sign a contract with Colliers, subject to persons who have already made a serious proposal to us. They have to be factored into that (the formal sales process). We’re trying to get the appraisal done by October 20.
“The main strands we’re pursuing are to restructure the staff, get the VSEPs sorted out and decide which staff we want to keep and put in place to make sure the property is organised, and then make sure we have all our ducks in a row on the sales document, offering memorandum and marketing materials, and proceed to get ahead in earnest.”