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Grand Lucayan’S Sale ‘Down To Final Papers’

The Grand Lucayan resort in Grand Bahama.

The Grand Lucayan resort in Grand Bahama.

• Royal Caribbean exec optimistic of ‘summer closing’

• But harbour talks with Hutchison ‘not completed’

• Project can’t proceed ‘as aggressively’ as planned

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A senior Royal Caribbean Cruise Lines executive yesterday voiced optimism that its Grand Lucayan acquisition will finally “close this summer”, adding that negotiations were “down to a handful of documents”.

Russell Benford, Royal Caribbean’s vice-president of government relations for the Americas, acknowledged to Tribune Business that many Bahamians are increasingly disbelieving that the resort’s redevelopment will ever happen but said the cruise line’s ambitions suffered a major hit when the entire industry was shutdown by COVID-19.

While asserting that Royal Caribbean and its ITM Group partner were “close” to sealing the deal for Freeport’s former ‘anchor resort’ property, he also confirmed that talks with Hutchison Whampoa over the accompanying redevelopment of Freeport Harbour also have yet to complete.

Mr Benford reaffirmed that Royal Caribbean/ITM, and their Holistica joint venture, remain intent on completing both deals at the same time. He added that the government’s acquisition of Grand Bahama International Airport from Hutchison-controlled Freeport Harbour Company had also given the partners greater confidence to move forward given that the facility was the hotel’s airlift “lifeline”.

“I think we’re close. I’ve been saying that for quite some time, I realise that,” Mr Benford told this newspaper in a nod to the protracted negotiations. “I’m hopeful that we close this summer, and I think we’re down to a handful of documents that need to be reviewed and a couple of financial instruments that have to go through the legal process, but we’re getting there and are hopeful of a summer closing.”

Tribune Business contacts, speaking on condition of anonymity, previously revealed at the time of the Grand Bahama International Airport purchase that the government had been hoping to close the Grand Lucayan’s sale to Royal Caribbean/ITM by June 15.

That timeline is only two weeks away, and appears unlikely to be realised. The government admitted as much in its 2021-2022 budget, allocating a $3m subsidy to Lucayan Renewal Holdings, the special purpose vehicle (SPV) that owns the resort, in a sign it fears it will be holding on to the property through September and the first quarter of its fiscal year at least.

Acknowledging the frustration among many Bahamians that the Grand Lucayan sale has yet to complete, with many now adopting a “believe it when we see it attitude”, Mr Benford pointed out that the deal - which took place just weeks before the COVID-19 lockdown - had been derailed by the pandemic.

With Royal Caribbean incurring billions of dollars in losses following the 15-month shutdown of the cruise industry, he explained that the cruise line remained committed to the project but will have to adopt a more phased approach to construction and redevelopment as cash flows allow.

“I think the timelines have shifted a little bit,” Mr Benford said. “We are not able to be as aggressive as we’d like with reconstructing the project at once. We have to do it in phases and explore what we can do. It’s taken us a bit longer to negotiate with Hutchison... COVID-19 was a tough time for all of us and to do business.”

Besides the Grand Lucayan’s purchase from the government, the Royal Caribbean/ITM proposal also calls for the addition of new cruise berths at Freeport Harbour as well as the creation of a water-based adventure theme park for the thousands of passengers that the cruise line plans to bring to Freeport on an annual basis.

That means the Holistica partners have to strike a deal with the Hutchison-controlled Freeport Harbour Company, as well as the Government, and Mr Benford confirmed that talks with the Hong Kong-headquartered conglomerate were “not completed” yet.

“We’re close,” he said. “Everything is moving in parallel to each other. The harbour is moving along with the hotel, and we’re trying to close at the same time for both those properties.”

Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business in late April that Hutchison Whampoa was “ratcheting up their game” to enable protracted negotiations for the Grand Lucayan’s sale to finally conclude.

He added that the Hong Kong-headquartered conglomerate “understands the urgency” to facilitate the hotel deal by reaching agreement with ITM Group/Royal Caribbean for Freeport Harbour’s redevelopment.

“I’m advised that it’s imminent,” the minister said then of the harbour agreement. “The local company [Freeport Harbour Company] is almost completely done with its negotiations with ITM and Royal Caribbean Cruise Lines. It’s very close. I’m advised that it will then be to Hong Kong for the final blessing.

“I’ve been advised they [Hutchison] understand the urgency that the government is applying, and are now ratcheting up their game to make it a reality.” Tribune Business has long reported that ITM/Royal Caribbean, and their Holistica joint venture, will not close the Grand Lucayan’s purchase until they have sealed the harbour’s redevelopment.

Closing on one before the other would give either Freeport Harbour Company, which is 50 percent owned and managed by Hutchison Whampoa, or the government the power and negotiating leverage to squeeze more concessions from ITM/Royal Caribbean knowing that the joint venture will be increasingly desperate to wrap up negotiations on the last component for its project.

The Grand Bahama Port Authority’s (GBPA) Port Group Ltd affiliate owns the remaining 50 percent in Freeport Harbour Company, whose agreement is vital to enabling the expansion of cruise ship berths and development of a water-based adventure park that will accompany a revived Grand Lucayan.

Mr Benford, meanwhile, said Royal Caribbean and ITM “feel a bit more confident in moving forward” now that the Government has acquired Grand Bahama International Airport and formally taken over its operations via the Airport Authority.

While the airport was not a deal breaker for the Grand Lucayan, he added that airlift was “incredibly important” to the hotel’s prospects of success. “Now the Government of The Bahamas has ownership of the property, we feel more confident it will be redeveloped,” he added. “We don’t know how it will happen, but it’s clear it has to be rebuilt in some form or fashion.”

Comments

tribanon 6 months, 1 week ago

These non-transparent transactions represent one of the greatest swindles ever perpetrated against the Bahamian people.

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realitycheck242 6 months, 1 week ago

This Royal Carribean executive was qouted as stating on a radio program that This Grand lucayan sale deal is tied to the Paradise Island crown land lease grant dispute that Mr Toby Smith is involved in.with the government. Its going to be either they get all the land they want on paradise island by the light house or no-deal. The Governmnt has to thread lightly on this one because its all or nothing.

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proudloudandfnm 6 months, 1 week ago

A phased approach to construction. I'm all for selling the hotel but if renovations/construction won't start for a number of years then what? This deal has to be real, hotel needs to be ready post pandemic not a year or two later...

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realitycheck242 6 months, 1 week ago

It will take years ....These are some of Royal Carribesn projects thats been put on hold because of the Pandemic......The Freeport Grand lucayan project is one of many....

Galveston Texas Cruise Terminal. First Icon Class Ship. (LNG powered) Bahamas Beach Club :Paradise Island. Perfect Day at Lelepa: Private island in the South Pacific Royal Beach Club in Antigua Royal Amplified program: Ship upgrades to Oasis, Freedom, and Voyager class ships. On hold until further notice Perfect Day makeover for Labadee in Haiti

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proudloudandfnm 6 months, 1 week ago

Yup... And no one knows what the cruise industry will look like for the next ten years. Scary. I know Carnival's port project here is nowhere near being started and seriously doubtful they'll even be able to start within 3 or 4 years. No idea what the answer is for GB at this point. All I know is its really bad here and only getting worse. Even the shipyard is in question now. They're owned by CCL and RCCL so how soon before they can replace the two dry docks they lost last year? Aint looking good for GB...

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tribanon 6 months, 1 week ago

Minnis, D'Aguilar and Dr. Scott are not "selling" the Lucayan Hotel property, they are being extorted by Royal Caribbean to quite literally give it away. And that's after these three corrupt bozos have overseen the government spending more than $160 million ($160,000,000) of the taxpayers' funds to acquire, pay severence benefits, service debt, etc. while just holding the property in an essentially non-operational state. Truly unbelieveable to say the least!

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proudloudandfnm 6 months, 1 week ago

I actually agree with you! Except I can't blame RCCl for taking a good deal when they see one. I put the blame at Hutchison entirely. They built a hotel knowing they're opposed to gambling, they refused to properly market the place, they refused to cooperate with casino operators and hotel operators, they oversaw a decade plus of poor performance resulting in the low value of property. Hutchison should never have been let off the hook, they should have been fined daily after they abandoned the property.

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TalRussell 6 months, 1 week ago

Be wise to put the fake documents OBAN-inspired alert in full operation: The Be Weary of Documents originating about anything involving FREEport?
Must have my snoopin' around nosey people, be engaging in some snoopin' around to see if it's at all possible that it's goin' be the exact same law chamber that drafted what would later become known as the fake OBAN paperwork, yes?

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proudloudandfnm 6 months, 1 week ago

Oban was never anything but a speculation deal. FNM fell for it hook line and sinker too. All the Moskos had to do after the FNM gave them everything they wanted was to go out and sell it without ever putting hammer to nail...

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birdiestrachan 6 months, 1 week ago

But the doc and Kawisi said the hotel would be sold in eight weeks they lied. eight weeks has come and gone a long time ago.

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TalRussell 6 months, 1 week ago

Comrade Kawisi is a crown member of the cabinet with a government-supplied motor car and chauffeur - still he knows must precisely read from the script's propagandised talking points that are handed down by the office of the prime minister (OPM), yes?

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