The Tribune

• Unclear if BISX-listed firm purchaser

• Final asset disposal for delisted entity

• Key recovery for collapsed $471m fund

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The sale of Doctors Hospital’s new Freeport home will represent the final asset disposal for a former BISX-listed company when it completes next month, Tribune Business can reveal.

Documents filed in the Canadian courts by the liquidators for a collapsed $471m investment fund structure, which have been seen by this newspaper, reveal the protracted search for a buyer for the First Commercial Centre may finally be nearing an end after a sales agreement was signed on May 26, 2021.

The deal, which gave the purchaser a six-month period to conduct due diligence, is thus due to close by the end of November once the necessary approvals are obtained from the Bahamian Supreme Court.

The sale, if it goes through, is significant in multiple ways. Besides involving the planned location of Doctors Hospital’s Grand Bahama hospital, it also represents the final property owned by Premier Commercial Real Estate Investment Corporation, the former BISX-listed real estate investment trust that delisted from the Bahamian stock exchange many years ago.

While Premier will effectively cease to exist as an operating business, any proceeds from First Commercial Centre’s sale can be paid out as dividends to its shareholders. And its majority 50.4 percent investor, Mosaic Composite, is the counter-party to an investment structure that collapsed some 16 years ago while owing long-suffering investors close to $471m.

Mosaic’s liquidators, who include Clifford and Myles Culmer of BDO Bahamas, have repeatedly said the ownership interest in Premier represents one of the best sources of recovery for investors. They have previously estimated that the First Commercial Centre’s sale, and Premier’s subsequent payout of the proceeds, could generate between $4m-$5m for the liquidation estate.

No forecasts were provided in the latest October 21, 2021, report to the Ontario Superior Court, although the mere $10.7m recovered for Olympus Univest investors to-date would increase by almost 50 percent if the First Commercial Centre proceeds goal is realised.

“In March 2020, the management of Premier engaged Bahama[s] Realty Ltd to advertise and market the property,” said the report by Richter Advisory Services’ Raymond Massi, the Culmers’ co-liquidator.

“Despite the prevailing negative economic impact of Hurricane Dorian on the economy of Freeport, plus the impact of the COVID-19 pandemic, various potential purchasers expressed preliminary interest in the remaining property.

“One potential purchaser continued its discussions with the management of Premier, which ultimately resulted in the receipt of a formal purchase offer. Discussions ensued, and counter-offers were exchanged, and the parties finally entered into a purchase and sale agreement on May 26, 2021 (the APA),” Mr Massi wrote. 

“The APA provides for a six-month due diligence period. Once the purchaser has completed its due diligence and waived its rights in respect thereof, the Mosaic joint official liquidators will present a motion before the Bahamas court to seek authorisation to conclude this sale transaction. All the supporting documents relating to this motion are in the process of being compiled in the interim.

“It is anticipated that the closing for this transaction will occur in November 2021. The total net proceeds, after payment of costs, Bahamas VAT taxes, and other incidentals relating to the transaction will be publicly disclosed at the time approval of the transaction is sought from the Bahamas court.”

No specifics were provided on the buyer or purchase price, although Bahamian realtors have previously listed the First Commercial Centre on their websites for $6m. It is thus unclear whether Doctors Hospital itself is the purchaser, or if it is merely going to lease space at the property from the buyer for its planned Grand Bahama hospital.

Neither Dr Charles Diggiss, Doctors Hospital’s president and largest shareholder, nor Dennis Deveaux, its chief financial officer, responded to Tribune Business inquiries and multiple messages seeking confirmation on whether the BISX-listed healthcare provider is the Freeport Commercial Centre’s purchaser. It has not announced any deal.

However, one source, speaking on condition of anonymity, suggested the First Commercial Centre’s purchaser could be a wealthy private donor who would then grant/donate the property to Doctors Hospital in their desire for quality trauma and tertiary care facilities to come to Grand Bahama.

“It’s a great thing that is potentially going to happen for Freeport. Doctors Hospital will pump some money in here, and put in a trauma centre. They’re expanding, and will be a welcome addition here, especially for foreign residents.”

Doctors Hospital certainly has the financial resources to acquire the First Commercial Centre itself after receiving a .Mr Deveaux told the recent Abaco Business Outlook that its 30-bed hospital Grand Bahama is targeting a fall 2022 opening.

And he previously told Tribune Business that Doctors Hospital plans to offer a 40 percent equity ownership interest in the $12m-$15m facility to northern Bahamas residents, with between 90-100 jobs created at “full maturity”.

The new Grand Bahama hospital will likely include at least some of the space previously used by the Okyanos Centre for Regenerative Medicine, the stem cell therapy provider now in separate Supreme Court-supervised liquidation.

Okyanos lost more than $30m over its lifetime. Cheryl Simms, the Kikivarakis & Co accountant acting as liquidator, revealed in her first report last year that the company had lost $30.172m - some $14.856m of which was incurred over the three years to end-2019.

These losses provide some insight into why LS Enterprises, Okyanos’ main debt financier, may have been eager to petition for the company’s court-supervised winding-up in the aftermath of Hurricane Dorian’s devastation given that it was owed some $12.438m in outstanding principal and interest.

Premier was founded and sponsored by Hannes Babak, the former Grand Bahama Port Authority (GBPA) and Freeport Concrete chairman, to acquire several commercial properties including the First Commercial Centre he himself developed. However, it was never a strong financial performer, and it previously sold-off the two former Caribbean Bottling properties it owed.

Among Premier’s founding directors, although he is no longer on the Board, was Stephen Hancock, president and chief executive of Cardinal International, the ex-Bahamian fund administrator for Olympus Univest, Mosaic and a number of other entities in the investment structure.

Cardinal, too, shut down at the time that Olympus Univest and Mosaic went into court-supervised liquidation. The Olympus Univest/Mosaic Composite collapse left around 1,900 small retail investors, many of them Canadian, out of pocket with no explanation as to where most of the money went.