The Tribune

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.