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Decision Imminent On Lucayan Deal

Grand Lucayan

Grand Lucayan

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Lucayan's chairman yesterday confirmed a preferred bidder for the resort is likely to be announced this week with the Board set to submit its recommendations imminently.

Michael Scott told Tribune Business that the Grand Lucayan Board was currently finalising its submission to the Government as he warned time is running out for the resort's managers and their representatives to accept what he branded as a "super generous" payout offer.

He argued that the Bahamas Hotel Managerial Association (BHMA) members and their president, Obie Ferguson, faced a choice of taking the collective $3.2m voluntary separation package (VSEP) currently available from the Government or walking away with much less after the Grand Lucayan is sold and they are terminated.

Confirming that the Grand Lucayan's Board met on Friday to discuss the assessment conducted on the best three to four purchase offers by Colliers, the Canadian-headquartered real estate firm, Mr Scott said he and his fellow directors were now completing their own report and conclusions for the Government.

"We're in the process of doing that right now, but otherwise my lips are sealed," he told Tribune Business, declining to comment further or identify the likely preferred bidder. Mr Scott and the Board had previously set end-March as the deadline for identifying a preferred bidder and submitting their proposal to the Government - a timeline that will be hit by the end of this week.

While no details have been forthcoming on the Colliers assessment or Board meeting’s outcome, multiple Tribune Business sources expect that the ITM/Royal Caribbean joint venture will likely be selected as the preferred bidder.

The Mexican port developer and cruise line are proposing to transform the Grand Lucayan, and the surrounding area, as well as Freeport Harbour into a destination product using water-based adventure theme parks. Both sides bring considerable expertise and development resources, with Royal Caribbean adding an extremely large customer base to the mix.

Tribune Business sources yesterday suggested that the Grand Lucayan's acquisition could result in Royal Caribbean electing to use Freeport as a "home port" for some of its cruise ships, with passengers flying in via Grand Bahama International Airport to "overnight" at the resort before setting off on their cruises.

Besides providing a major boost for the aviation industry and airlift into Freeport, this newspaper's contacts added that becoming a "home port" could also revive prospects for the liquefied natural gas (LNG) industry on Grand Bahama.

Cruise ships, especially the 90-100 currently in production, increasingly rely on LNG as a fuel - opening up the possibility for LNG bunkering services to be offered from Freeport. BISX-listed Arawak Port Development Company (APD) has made no secret of its interest to do similar in Nassau in partnership with New Fortress Energy as part of the $250m cruise port redevelopment, while Shell North America is looking at similar spin-off opportunities from the new New Providence power plant that it will construct by 2022.

Mr Scott, meanwhile, reiterated his and the Board's continued tough stance over the BHMA's payout demands for the 90 Grand Lucayan managers who wish to accept the VSEPs and leave if the terms are right.

While the Industrial Relations Act was amended under the former Christie administration to mandate that the terms of an expired industrial agreement remain in effect until a new one is agreed, the Grand Lucayan Board's position is this does not apply to its deal with the BHMA as it ended before the law was changed.

As a result, the Board and government are arguing that the terms and conditions of the BHMA's last industrial agreement no longer remain in effect, giving them the ability to deal with each managerial staff member on an individual basis rather than as a collective trade union.

"We have non-suited the management union at the Tribunal," Mr Scott told Tribune Business. "They had brought Industrial Tribunal proceedings against us.

"We were advised by our attorneys, ParrisWhittaker, and made a submission that there was no legitimate industrial agreement even though there was an amendment to the Industrial Relations Act that even if a union agreement expired it was deemed to continue in effect until a new one was agreed.

"There is no valid industrial agreement, so we're able to deal with the union members on their own. They can either deal with the generous offer that was endorsed by the minister [of tourism and aviation] as recently as last week; they can either accept that or wait for the sale of the hotel and everyone to be terminated," he continued.

"They will get much less on termination than they will get from the current proposal that we made with the approval of Cabinet and the minister of tourism. They can either accept it now or end up with much less when the hotel is sold.

"They can either take what we're offering them now, a super generous offer, or wait for the sale and termination of their employment. I'm done. That's it."

Negotiations between the BHMA, and Lucayan Renewal Holdings/the Government, have become contentious on several occasions with the latter arguing that there is simply no more money available for VSEPs due to its desire to minimise taxpayer exposure to a loss-making property it is aiming to sell back into private sector hands as rapidly as possible.

Backing Mr Scott, Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business on March 14 that the Government was not increasing the total value of its payout offer beyond $3.1-$3.2m. The BHMA is demanding $5.5m, a figure that includes the retirement annuity, leaving them some $2.4m apart.

The Government, initially basing its VSEP offer on the Employment Act, which caps payouts at 12 years of service, had proposed $2.64m - the sum likely available to the managers should no agreement with the BHMA be reached before the Grand Lucayan is sold. Mr Scott had subsequently increased the offer by around $500,000 to the present sum.

Mr D'Aguilar, minister of tourism and aviation, striking a markedly more conciliatory tone, yesterday said he was "minded to accommodate" the BHMA's request for another meeting this week but warned that "compromise" was essential to achieving resolution.

"He [Mr Ferguson] has requested another meeting, and I'm minded to accommodate them," he told Tribune Business. "We'll meet later this week. Cabinet is on Tuesday, parliament on Wednesday, so probably Thursday. It's a process. We're negotiating.

"He wants 'x', we don't quite have 'x', so we're trying to find a middle ground everyone can live with. We will meet again. It will be cordial, very conciliatory, but I guess that at the end of the day negotiations require compromise. Who will be prepared to compromise what will determine whether we have a deal. The negotiations continue.

"I've found in my business life that if you hold out for the best, best deal inevitably you don't get it, but it takes time to determine that. A bird in the hand is worth two in the bush. It's better to get not quite what you want rather than wait months and months to find out you're not getting everything you ask for. You end up compromising," Mr D'Aguilar said.

"If I was an employee, delaying and delaying months just to get an extra 10 percent, is that worth it? Or settle and move on. We're going to discuss what they want to discuss, but at some stage a decision has to be made on a solution."

The Government and Grand Lucayan Board have argued that the union’s comparisons with previous VSEPs are inappropriate because those involved operating businesses in the process of being sold or restructured, while the Grand Lucayan has yet to be disposed of.

The union’s total $5.5m payout figure also includes the workers’ retirement annuity, but the Grand Lucayan Board’s position is that it needs to take this issue up with Hutchison Whampoa - not the Government.

Some observers will likely argue that the Government should have left the staff payouts to the Hong Kong conglomerate rather than take responsibility itself, as this could have avoided the present impasse.

Comments

Well_mudda_take_sic 1 year, 6 months ago

This will no doubt be another gargantuan "giveaway" to foreign interests, much like the recently announced Disney deal. Like the Disney deal, the concessions given to the new Lucayan owners will be so overwhelming generous that they will effectively constitute a most disgusting burden on Bahamian taxpayers for decades to come. Only a few corrupt politicians and their select few private sector cronies are going to very wrongfully benefit 'big time' from the Great Lucayan Giveaway, as was the case for the Great Disney Giveaway. Bahamian taxpayers are to once again be left holding the proverbial empty bag which means more taxes for them to pay down the road as our national debt continues to escalate upwards. LMAO

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realitycheck242 1 year, 6 months ago

One of the reasons the wynn group walked away from the grand lucayan hotel was because he could not get the horse and carriage from the government. Any new winner will negotiate for the horse carriage and customers and that's what the government is prepared to give away for a deal. They just want the operating burden from around their neck.

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Bahamas09 1 year, 6 months ago

What do you mean "giveaway"? If not foreign interests then who else is prepared to run with the ball? It foreign interests that have the money and are prepared to take the risk of making any business viable on GBI. That damn hotel has been closed for over 2 years and who knows what kind of state its in currently and how much it will take to restore it. I'm not aware of any bidding war if it was such a great deal!! It'll take millions of dollars to re-build the brand and I'm not talking just paint and drywall. What do you mean by cronies benefiting BIG TIME? Are you suggesting that a politician is on the take? Say it ain't so!! That hotel has put a couple of thousand people out of work. People have had to move away to seek employment and the ones that have stayed have to either do without or take multiple jobs to make ends meet. The National Debt has climbed through gross mismanagement voted in by the people.

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Sickened 1 year, 6 months ago

The 'home port' idea is a great one. If cruisers can start their tours in Freeport this will almost guarantee a hotel room night before and/or after - perhaps more than 1 night. Taxi's, rental cars, everyone will benefit from a 'home port'.

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yeahyasee 1 year, 6 months ago

Exactly that would be great news!

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Well_mudda_take_sic 1 year, 6 months ago

Is this all you're content to receive in return for this great giveaway? A mere tuppence? There's so much more that could be, and frankly needs to be, had.

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FreeportFreddy 1 year, 6 months ago

True - but the 5 to 10 years of it being vacant will spell too much hardship for GBI

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realfreethinker 1 year, 6 months ago

Well_mudda. You are one angry person.You must have been hurt real bad. There is never anything positive in your post.

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FreeportFreddy 1 year, 6 months ago

$3.2 Million...for 114 Managers = $28,070 per person

That's quite a bit of coin!

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TalRussell 1 year, 6 months ago

Yes, yes and yes there is no possibility making up comrade Michael Scott's attentive reading how time is running out for the resort's managers and their representatives to accept what he branded as a "super generous" payout offer... arguing that the hotel's mangers faced a choice of taking the collective $3.2 million voluntary separation package (VSEP) currently available from the Government or walking away with much less after the Grand Lucayan is sold and they are terminated........ but no such human intelligent demands were ever made by Imperial red shirts cabinet on Whampoa pay off their hotel workers before handing over PeoplesPublicPurse's $65 million buy the left unrepaired hurricane damaged Grand Lucanan Hotel, yes, no and why not before handing over payment dumpiest ever deal made by a government, yes, no?

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Bonefishpete 1 year, 6 months ago

Honestly I don't know how that hotel could ever swing a profit without government handouts. It is what it is.

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TalRussell 1 year, 6 months ago

Would you not concur ma comrade Bonefishy, that anything corporate requiring 'welfare' from PeoplePublicPurse's, is not worth operating as a free enterprise for profit venture, yes, no?

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ThisIsOurs 1 year, 6 months ago

"I've found in my business life that if you hold out for the best, best deal inevitably you don't get it, but it takes time to determine that. A bird in the hand is worth two in the bush. It's better to get not quite what you want rather than wait months and months to find out you're not getting everything you ask for. You end up compromising," Mr D'Aguilar said."

Well there it is, they spent 100m to give the hotel away for $1 AND pay the operator to subsidize marketing and airlift.

It's better to have not bought the hotel, not raised VAT, not made claims about balancing budget in 3 years, not gotten into bed with oban, not dragged ex ministers to jail with shake evidence at best. That's what would have been "better"

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