The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is pledging a "seamless migration" in a bid to reassure 400 "very anxious and concerned" Grand Lucayan workers prior to taking over the resort's operations today.

Well-placed Tribune Business sources, speaking on condition of anonymity, yesterday said the Government-owned special purpose vehicle (SPV), Lucayan Renewal Holdings, now aims to close the property's $65m acquisition from Hutchison Whampoa's real estate arm on September 21.

The Minnis administration had planned to complete the purchase and operational takeover at the same time on September 11, but the deal's closing has been delayed by the need to obtain a House of Assembly resolution authorising the Government to guarantee repayment of the debt taken on to finance the acquisition.

"Some people will take [a severance] package and some will stay on," a government source told Tribune Business of the Grand Lucayan's 423 staff. "There's going to be a seamless migration, and no one will be prejudiced."

Michael Scott, chairman of both the Hotel Corporation and Lucayan Renewal Holdings, declined to comment when contacted by this newspaper last night. He had previously revealed, though, that some staff would likely be willing to accept voluntary severance (VSEP) packages if the terms were right.

Grand Lucayan staff yesterday received a letter informing them that Lucayan Renewal Holdings will take over the property's management from Hutchison Lucaya Ltd as of today, with their terms and conditions of employment - including salaries and benefits - remaining unchanged.

Obie Ferguson, the Trades Union Congress's (TUC) president, told Tribune Business at the weekend that uncertainty over the Government's plans for Freeport's anchor property - and especially the remaining employees - had made workers "very anxious and concerned" as to their potential fate.

Two unions are present at the Grand Lucayan - the Commonwealth Union of Hotel Services and Allied Workers, headed by Michelle Dorsett, which represents line staff, and the Bahamas Hotel Managerial Association (BHMA) whose members are drawn from the resort's middle management.

Both are TUC affiliates, with Mr Ferguson acting as their legal adviser, and the veteran trade unionist said they would be unable to properly advise members until they met with the Government.

Mr Ferguson, who did not return Tribune Business's message last night seeking further comment, said earlier: "The Government is proposing to take over on September 11, and what we have decided is to meet with them shortly thereafter what was the deal as it relates to the employees.

"We have not yet met with them to finalise how the sale will affect the existing employees. I suspect it will be open to people to take severance."

Mr Ferguson said the Government, and Lucayan Renewal Holdings, had two options available to them when dealing with the take over of a hotel property where an industrial agreement was recognised and in effect.

It could either agree to retain the workforce on the same terms and conditions as they enjoyed previously, or alternatively the old employers pays them due severance and a new contract is agreed with the buyer.

It appears the Government has taken the former option, and Mr Ferguson added of the Grand Lucayan's staff: "They're very anxious because the level of certainty is not known to them at this stage.

"The union cannot put forward a definite position to them until such time as it is informed by the Government's representatives. They're [the staff] very concerned, obviously, as to what is going to happen.

"In our case, the industrial agreement is there, and we will end up working with the Government to find a resolution," Mr Ferguson continued. "The workers, to be perfectly honest with you, are very concerned because we are unable to tell them precisely what the situation is.

"We want to make sure that when we meet with the members we give them the correct information, not what we think and believe."

Mr Scott previously revealed to Tribune Business that closing of the Government's $65m purchase may be "slightly delayed" because the necessary resolution authorising the Government guarantee can only be effected when Parliament resumes on September 19 following the summer recess.

The guarantee will be worthless without the resolution, since this is required to bring it into compliance with the law in the form of the Financial Administration and Audit Act.

The Minnis administration is thought to be financing the Grand Lucayan purchase with a combination of debt and the $25m allocated in the 2018-2019 Budget to support the now-abandoned Wynn Group purchase.

The deal is structured so that the Government pays a $10m deposit, which it has done, and a further $20m upon closing. This is likely to be financed largely through the Budget, with the $35m balance split into semi-annual $5m payments spread over three-and-a-half years.

That portion will come from debt, with the funds likely to be extended by the Grand Lucayan's departing owner, Hutchison Whampoa, as a form of vendor financing. This was proposed a year earlier, when the Minnis administration first suggested it would take an equity stake in a purchase of the resort.

A mortgage, secured on the Grand Lucayan's real estate assets, will provide security for the loan or any form of debt financing. The Government guarantee is needed to provide assurance to the lender that its monies will be repaid.