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Grand Lucayan: 'Many' Managers Want Severance

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A "substantial number" of the Grand Lucayan's middle management staff want to take a severance package and leave the resort, a trade union leader said yesterday.

Obie Ferguson, pictured, the Trades Union Congress's (TUC) president, told Tribune Business that feedback received to-date indicated that "a sizeable number" of Bahamas Hotel Managerial Association (BHMA) members would exit if the terms were right after the Government formally took control of the Grand Lucayan's operations yesterday.

With its $65m purchase of the property's real estate and other assets set to close on September 21, Mr Ferguson said confirmation of how many want to leave will be known "on a day or so" after a questionnaire to obtain this information was circulated among BHMA members.

"Some of the staff are asking for severance pay; quite a lot," he revealed. "I'm just trying to get the numbers. The feedback I've received is that it's a substantial number. I believe most of the workers would take a package.

"That's my general view, but we're trying to get the exact number. I put out a questionnaire to the BHMA because we want to be in a position to say to the chairman [Michael Scott] how many persons are mindful to go that route.

"We will know the exact number in a day or so, but as it stands a sizeable number want to take severance pay." The Grand Lucayan, Freeport's sole remaining "anchor" mega resort, currently employs 423 workers, comprising both line and managerial staff. The BHMA represents the latter, while the Commonwealth Union of Hotel Services and Allied Workers, headed by Michelle Dorsett, looks after the line workers.

Mr Scott, chairman of Lucayan Renewal Holdings, the Government-owned special purpose vehicle (SPV) created solely to purchase and own the Grand Lucayan, has previously indicated his intention to make available a severance package for those workers wanting to exit.

The SPV, though, will have to be careful over who it releases and how many, as it will not want to compromise hotel operations and service quality when beginning its search for a private sector buyer to take the Grand Lucayan off the Government's books in the quickest possible time. It will therefore likely reject some severance applications, especially by individuals in key positions or who have in-built proprietary knowledge of the hotel and will be difficult to replace.

Mr Ferguson, meanwhile, indicated his desire to meet Mr Scott this week, once the latter has addressed all Grand Lucayan staff today, to resolve all union concerns.

The BHMA is a TUC affiliate, and he said: "I spoke today with Mr Scott, and he indicated to me that he's having a meeting with the staff and he will meet with the unions, so we can discuss the details of the way forward.

"We want to make sure our understanding of the arrangement is consistent with Lucayan Renewal Holdings' position. We intend to meet with chairman Scott, finalise the numbers, and see how the Government would be interested in moving forward with severance pay and so on."

Mr Ferguson said the BHMA had been working on a new industrial agreement with the Grand Lucayan's departing owner, Hutchison Whampoa, and would discuss "how best to approach that" when it meets Mr Scott.

The TUC president also backed the Government's purchase of the Grand Lucayan as "the proper thing" to have done, given the negative economic and unemployment consequences for the hotel's staff and wider economy had Hutchison Whampoa followed through with threats to close the Lighthouse Pointe, the last remaining property.

"I commend the Government for doing what it did in the interests of the Bahamas and interests of workers," Mr Ferguson told Tribune Business. "The first obligation a government has is its citizens. Certainly my union, and the unions involved, will work with the Government to ensure that enterprise remains profitable and keeps people employed.

"The Government did the prudent thing to preserve the status of the workers and do what it has to do to make the property marketable to potential buyers. While there are people who may have a different view, governing is one thing but when you are a spectator you tend to have all the solutions and answers. When governments do good things you must say so."

The Minnis administration had planned to complete the Grand Lucayan's 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.

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.

Comments

TalRussell 2 months ago

Ma Comrades, if the law governing the requirement pre approval all spending monies out PeoplesPublicPurse was written format make it KISS foolproof (hello AG Carl Wilshire), wouldn't it be clear that all comrades red from Freeport and Grand Bahamaland man's and woman's who on 10 May, 2017 were elected Peoples Honourable House of Assembly - are outright guilty, or at minimum, are complacent in the unauthorized handing over monies and financially obligating the PeoplesPublicPurse in the purchase Freeport's Lucayan Hotel? Something, Her Excellency Marguerite, should have already brought attention Buckingham Palace... being the two royal woman's should be be in a united collision mood oust Minnis, KP, Carl Wilshire - along all Freeport and Grand Bahamaland red members House and Upper red Chamber.

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ThisIsOurs 2 months ago

What a mess. How we get stuck with this? It's just like Oban, just like the BEC VSEP. Do something with no consideration of the full scope of the initiative. Now they backtracking all over the place. First Minnis was going to go to cabinet to give a rationale for the sale, one MP said he was looking forward to getting more information in the debate. Then Minnis tell Osbourne to sit easy. Then he must be tell Bannister to fire the whole board. Then he said he's ordering an investigation. Crickets. Then the Pointe ratio isn't really a hard and fast ratio. Then Krigers HOA couldn't be signed on the 19th as announced because it was already secretly signed on the 10th. Then Minnis buy the hotel without informing cabinet. Then they out 12% VAT without informing cabinet. Then they remove the 12% for the rich people.then he announce that the sale would be complete on the 11th. Then oops we can't complete the sale on the 11th because we have to go to cabinet. Then oops the workers don't want to be employed and some owed back pay. And btw we renovating the tower with the most damage despite having said we not doing any renovation and it shouldn't cost much

If you made it through that and thought it was written like a bunch of garbled mess...well that's what it is.

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BahamaPundit 2 months ago

This is why we need campaign finance reform folks. The only way this deal can "kind of" be made sense of in my opinion is if large bribes were paid before the election to ensure the Government purchased the hotel along with the dreaded staff liabilities using a BOB style SPV. Other than this explanation, it can only be described as one of the most foolish purchases in the history of planet Earth.

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OMG 2 months ago

Governments cannot and will never run private enterprises efficiently because of lack of experience and the knowledge that the government will fund all losses. Might be cheaper to invest the 65 millon and pay each worker a pension for life.

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DDK 2 months ago

WHAT a farce! These people need to go before they tax us to death every time they jump from a frying pan into a fire. All the sharks see Government's gross incompetence and are circling to see just how much of a bite they can take out of the Public purse. The whole thing is truly sickening.

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OriginalBey 2 months ago

Severance? Five minutes ago they had what? Did the administration anticipate all of this when they made this investment? Hotel employees don't want to work they want to live high off the hog on their couches. This is disgraceful and only amplifies the huge faux pas made by Minnis. Cried for jobs. The government made a naive move to address that and their response is to exploit the situation. Wonders never cease!

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Socrates 2 months ago

these folks aren't silly... they know a sinking ship when they see it and they also know the best separation package they could ever hope for will come from a weak and gullible gov't. whatever happened to long established practices like redundancy and outright termination.

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