• Ex-Lucayan chair: We left four ‘serious, vetted’ offers
• Urges Davis administration to ‘consider them carefully’
• Backs new Gov’ts decision to exit deal ‘embarrassment’
By NEIL HARTNELL
Tribune Business Editor
The Grand Lucayan’s ex-chairman yesterday urged the Davis administration to pick up four “serious” purchase offers for the resort that he left behind as an alternative to “an act of humiliation”.
Michael Scott QC, hailing the Government’s decision to terminate negotiations with the ITM Group/Royal Caribbean joint venture, told Tribune Business that the former Board had “vetted” those bids from among 13 rival offers it had received to acquire Grand Bahama’s so-called ‘anchor’ resort property.
Declining to identify the investors and corporate groups involved, he argued that the Government only has to “find one of the four” as the solution to long-standing woes that prompted the Minnis administration into a $150m taxpayer intervention to acquire the Grand Lucayan and then keep it afloat.
Voicing “regret” that the Minnis administration “did not see the wisdom” in walking away from the ITM/Royal Caribbean offer sooner, Mr Scott branded that deal as “an act of humiliation” where he would “have preferred to resign” rather than agree to the terms the joint venture - called Bahamas Ports Investments - was offering.
Suggesting that the Government was unlikely to give himself, or the former Board’s other members, credit for their advice, he said of the new administration: “I think that on balance they appear to be taking the considered and well thought-out recommendations of myself and the Board, and all we can do is commend them for doing that.
“I regret very much that the former government did not see the wisdom in our approach. I have considered, and always considered, the revised offer by Bahamas Ports Investments as an embarrassment and not in the best interests of the country.”
Tribune Business revealed back in October 2021 how the former Lucayan Renewal Holdings Board had “unanimously” recommended to the Davis administration that it exit the ITM/Royal Caribbean deal and “move on” with alternative options - something that Mr Scott effectively confirmed yesterday.
While the resort’s redevelopment held the most potential economic benefits for The Bahamas and its people, this newspaper reported that it had become “an after-thought” for Royal Caribbean which was more focused on Freeport Harbour’s cruise berth expansions/additions and creation of a water-based adventure theme park.
The original deal struck with the Government was watered down as a result of the COVID-19 pandemic to such an extent that the original two-year timeline for redeveloping the Grand Lucayan was pushed back to ten to 15 years - a factor that meant the agreement “makes no sense” for The Bahamas.
And ITM/Royal Caribbean were also seeking vendor financing from the Government, with just $10m of the $65m purchase price to be paid up front. Much of this was subsequently confirmed by Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, who confirmed that both sides had mutually agreed to cancel the ITM/Royal Caribbean deal.
Tribune Business had also reported one week prior to the cancellation that the ITM/Royal Caribbean deal was off the table and would not be proceeding, although Mr Cooper denied this when contacted.
Mr Scott, though, argued that the Minnis administration’s September 2018 intervention to acquire the Grand Lucayan for $65m from Hutchison Whampoa’s property development arm was justified given the need to prevent the resort from becoming a second Royal Oasis and the near-total collapse of Freeport’s tourism/hotel economy.
Referring to Michael Pintard’s recent defence of the previous administration’s actions, the QC added: “I understand what the new leader of the Opposition said; that it was to save a major landmark facility in Grand Bahama from being closed, being shut down, and deteriorating with degradation setting in as happened at the Royal Oasis, and an attempt to preserve as much employment as possible for what the hotel represents as a microcosm of the Grand Bahama tourism industry at its core.
“But the diluted deal presented to the former government as a fait accompli was not only wrong, and not in the best interests of the Bahamian people, but an act of humiliation and I would have preferred to resign rather than agree on a deal on those terms. I back them [the Davis administration] for following the course we recommended.”
The ITM/Royal Caribbean deal, in its pre-pandemic version, might have succeeded and gone through had it not been for COVID-19’s intervention, but this will now never known. However, the cruise giant, has said it is searching for a new land-based tourism partner to replace ITM and remains interested in acquiring the Grand Lucayan. It is also persisting with the harbour project.
Mr Scott, though, disclosed that the Government is not short of alternatives and said he was “very confident” it could quickly locate a Grand Lucayan purchaser. “We left at least 13 other potential offers, four of which we regarded as being serious offers or expressions of interest. We urge the Government to consider them carefully,” he told Tribune Business.
“Four were vetted by us and considered to be serious. They only have to find one of the four. Hopefully they can manage that. Their decision to bring that agreement for sale to an end and decouple the hotel from the harbour is the right decision, and I’m glad they followed our recommendation.
“Personally I never had much faith in ITM, and Royal Caribbean Cruise Lines should stick to what it does best, which is to operate cruise ports and cruise lines. The biggest mistake any developer can make is to get out of their comfort zone and get into areas they have very little acquaintance and association with.”
Mr Scott added that if the Carnival and Royal Caribbean port deals for Grand Bahama “do in fact mature and take off, it will be worth a vertically integrated operator like Memories and Sunwing taking another look” at the Grand Lucayan.
These entities, and their integrated airlift/tour/hotel operator model, appeared to hold out the most promise for making the resort work due to their ability to better control costs and margins until they departed in late 2016/early 2017 following Hutchison Whampoa’s inaction over Hurricane Matthew repairs.
Dionisio D’Aguilar, the former minister of tourism and aviation, had blamed the ITM/Royal Caribbean joint venture’s failure to reach agreement on a separate deal with the Hutchison Whampoa-owned Freeport Harbour Company for delaying the Grand Lucayan’s sale.
He revealed that concluding negotiations over Freeport Harbour’s redevelopment - including the addition of new cruise berths - was a “condition precedent” that must be satisfied before the joint venture will acquire the resort from the Government - a situation that prevailed through the general election.