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Lucayan's 150 Staff Exits To Cost $2-$3m

The Grand Lucayan resort in Grand Bahama.

The Grand Lucayan resort in Grand Bahama.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Lucayan's chairman yesterday estimated it will cost the Government between $2-$3m to finance the voluntary departures of 150 workers seeking to leave the resort.

Michael Scott, pictured, in a statement issued yesterday, confirmed that the Government's newly-acquired resort is on track to to reduce its workforce by one-third after 60 management staff, and 90 line employees and casual workers, volunteered to accept severance packages.

He added that this would slash the workforce from more than 450 to around 303, describing the latter number as "more closely aligning" with the demands of the 196-room Lighthouse Pointe property - the only one of the three Grand Lucayan hotels that is currently open. The separations will start towards the end of this month or the beginning of November.

Mr Scott, who chairs Lucayan Renewal Holdings, the Government-owned special purpose vehicle (SPV) that controls the resort until a buyer is found, told Tribune Business that he and the board were "crunching the numbers" to ensure figures supplied by the two trade unions representing its workforce matched their own.

Promising that the Grand Lucayan will "follow the law" on both the sums paid out and structure of the voluntary separation packages (VSEPs), he added that "misconceived claims" will not be entertained given that "public money" - meaning the Public Treasury and Bahamian taxpayers - will finance the payouts.

"If people wanted to leave we weren't going to stand in their way," the Lucayan Renewal Holdings chairman told this newspaper. "We expected there would be some realignment and readjustment, and that's OK with us as we want to run it as efficiently and cost effectively as we can."

Mr Scott, an attorney, said both trade unions - the Commonwealth Union of Hotel Services and Allied Workers (CUHSAW), which represents the line staff and is headed by Michelle Dorsette, and the Bahamas Hotel Managerial Association (BHMA), which acts for middle management - had been co-operative in working with the Board to supply lists of who wanted to leave and the sums said to be due to them.

"We're crunching those numbers now," he confirmed to Tribune Business. "That's Ellison Delva, our restructuring officer, and Linda Turnquest, from Grand Bahama Shipyard, who sits on the Board as treasurer.

"They're crunching the numbers and going through everything. Once they're done, we'll have a firm number, hopefully by the end of this week or the beginning of next week. It's hard to say, but it'll be somewhere between $2-$3m. It will be several million."

The Lucayan Renewal Holdings Board has to reconcile the union-supplied figures with its own, and determine if it needs to retain any of those wishing to leave to maintain the resort's smooth functioning.

"I'm not paying any outstanding gratuities or claims that are misconceived. This is public money. I'll be following the law," Mr Scott warned, adding that the Government had "departed from the norm" by taking on the staff severance liabilities itself.

He added that this was normally the seller's responsibility in transactions of this nature, but the Minnis administration elected to take it on itself given the strained relationship with Hutchison Whampoa over the Grand Lucayan's sale.

"We didn't want to leave that to Hutchison. We've had a very difficult relationship with Hutchison," Mr Scott admitted. "Severance is usually the obligation of the seller, not the purchaser, but in this instance, given the historically difficult relationship with Hutchison, the Government opted to exercise the principle of parens patriae - parent of the nation - as protector of its citizens' rights of those who would be unable to protect themselves."

Still, the severance pay costs are likely to reignite concerns about the Government's (taxpayer's) financial exposure to Freeport's last 'mega resort' property, especially if it is unable to fulfill its "quick exit" strategy by selling it to a new buyer within three to six months.

Besides the $65m purchase price, the Government also committed to a $2m subsidy to cover Hutchison Whampoa's operating losses between August 1 and September 11, and waived the payment of $3.25m in Stamp Duty on the conveyancing by the Hong Kong conglomerate. The latter also walked away with $80-$85m in Hurricane Matthew insurance proceeds, rather than put them into repairs.

The Government also faces a $35-$39m repair bill if it chooses to proceed with renovating all three Grand Lucayan properties. K P Turnquest, deputy prime minister, previously said the full financing costs could run as high as $124m - a sum still below the total subsidies demanded by Wynn Group and Sunwing, the last two private buyers to look at the property.

Mr Scott, meanwhile, said he expected around 50 percent of the "dozen people" showing interest in acquiring the Grand Lucayan to "withstand" due diligence, and come up with the capital and vision required, to revive the entire Lucayan strip and transform it into a destination product.

"We've got over a dozen people expressing interest, but maybe half a dozen will withstand due diligence and get the capital and liquidity together to make the investment this project requires. That's what it's going to come down to," he told Tribune Business.

"I'm not wasting time. There's no time to waste. There's extensive interest, significant in both terms of quality and in volume. We're also getting inquiries from non-serious players, but those I file in the proverbial round hole, which is the garbage."

The Lucayan Renewal Holdings chairman added that he hoped to obtain a new appraisal, showing the estimated value of the resort's real estate and physical plant, by the end of this week. Its completion is key to enabling the SPV to complete its offering memorandum for prospective buyers, thereby launching the formal sales process.

Mr Scott was backed by Dionisio D'Aguilar, minister of tourism and aviation, with both men separately visiting Florida on Friday to meet with potential Grand Lucayan purchasers and assess their existing operations.

"There's certainly a lot of interest," Mr D'Aguilar told Tribune Business, "but having people interested is one thing. It's what you need to close the deal. The devil is in the detail. We're looking at people we think are serious and discussing their vision and idea.

"We're telling them what we can and can't accept, so they can adjust their proposals accordingly. We're trying to weed out who is a viable bidder and who is not. The way to do that is look at their projects and who they have coming out to make a proposal to see if they are credible and viable."

Comments

proudloudandfnm 1 year, 11 months ago

I'd love to see a census done in Freeport. Be interesting to see what our populatuon has shrunk to now. No jobs, anywhere. People have been moving away now for years. And while they're gone Freeport continues it's decline. Keasi said he is happy with the progress being made in Freeport. Reality though is very different. Zero progress has been made. Plenty regress. But zero progress.

And no light at the end of this tunnel. Not even a glint.

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birdiestrachan 1 year, 11 months ago

When did these people find out that the seller should have paid all of the severance I guess it was the same time they did not receive the stamp duty.

When you dumb you are dangerous in deed. When they found items were bein moved the dumb ones went over the papers to find out what their rights were, and the really dumb one called to say this is a sovereign nation, Hutchison knows that. They knew it before they took you all to the cleaners , wash you all out, and hung you all out to dry.

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Well_mudda_take_sic 1 year, 11 months ago

LMAO. The Lucayan Hotel purchase by government is nothing but a monstrous fraud perpetuated on Bahamian taxpayers by Minnis and Turnquest. Many many of Minnis's political friends and other cronies are just salivating at the prospects of being invited on board the Lucayan Hotel gravy train for a most joyous ride to prosperity at the expense of honest and hard working Bahamian taxpayers.

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birdiestrachan 1 year, 11 months ago

Appraisals are done before purchases. How is it that they paid Hutchison, before an appraisal was done.??

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TalRussell 1 year, 11 months ago

Ma Comrades, I thinks I just became a much more enlightened understudy after reading Whampoa's book, "The Art of the Deal" about exactly what was the true purpose the Imperial red shirts Minnis and KP - created sometin they named Special Purpose Vehicle (SPV) ...... they once again gassed up use as vehicle give away another $3 million out WorkingPeoplesPublicPurse...... that is if what I did just read, I just did read? ( Impossible make ups such Whampoa returns sucks even more red shirts funded relief Lucayan Hotel workers responsibility to walk away financially harmless paying workers $3 millions }.

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BahamaPundit 1 year, 11 months ago

Instead of a hotel, picture the Grand Lucayan as a giant hose that sucks our VAT money out of the public Treasury and shoots it into the private pockets of FNM cronies.

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TalRussell 1 year, 11 months ago

Ma Comrade BahamaPundit, you'd be stretching suggest upon reflection that the Imperial red shirts may just have wished they'd created SPV 11 as special vehicle appoint political crony to brokers to walks the $3 million from vault WorkersPeoplesPublicPurse WPPP, across street to hand over the workers agent, and all for a 10% brokerage fee? Seems potential be hiring surplus hundreds red shirts 10% agents between now and 2022?

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VDSheep 1 year, 11 months ago

Sell shares as a cooperative to workers ‘ Grand Bahamians – everyone – and let Bahamians with hotel management skills run it without political interference

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Porcupine 1 year, 11 months ago

The best thing that could have been done for this country is to nationalize the Grand Lucayan. Hutchison's performance left no doubts that they had zero interest in The Bahamas well being. They should have been shown the exit door, with a press release to the international media that we expect those who come here to do good for The Bahamas. Instead, we are giving away OUR hard earned money to those who have not earned it.

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Bonefishpete 1 year, 11 months ago

White Elephants Only Get Bigger. Seller is laughing all the way to the bank.

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BahamaPundit 1 year, 11 months ago

Imagine the look on Minnis' face if all of a sudden he found out the money to buy the Grand Lucayan was coming out of his personal bank account. He would cuss to high heaven about what a piece of S _ _ T it is and how there's no way in hell he'll spend a dime of his money on it.

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TalRussell 1 year, 11 months ago

I have dear friend having lived in Freeport for near most their adult life and a long time faithful member and supporter of the red shirts party - going back early days comrade Cecil, who telephoned me up few nights back and I could sense in deep disappointment her voice how it just felt completely wrong to be any longer associated with anything red shirts.

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The_Oracle 1 year, 11 months ago

Funny how we assign measures of intelligence and logical function to the Elected while we all know full well they're incompetent idiots. (who have somehow gotten a few supposed intelligent people to drink the purple koolaid.) We know they cannot run it, we know there is no airlift, we know It needs remediation, we know the crony's and ex defunct hotel management are clamoring for executive pillaging posts, And still we have hope? Not a hope in hell.

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bogart 1 year, 11 months ago

12 th para ...."given the strained relationship with Hutchinson Wamphoa"......

13 th para....."We've have a very difficult relationship with Hutchinson."

13 th para......"given the historically difficult relationship with Hutchinson"

Sooooooooo...... why did the negotiators go back to the same people .......to borrow negotiate a loan .....from the same peoples .....to pay the balance of the purchase price to buy da hotel ......?????

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sheeprunner12 1 year, 11 months ago

FNM stuck between HW and 5 seats ............. LOSE-LOSE

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