By YOURI KEMP
Tribune Business Reporter
THE deputy prime minister yesterday said the Government had grown tired of the prospective $100m Grand Lucayan buyer constantly stalling over the deal by repeatedly asking for due diligence extensions.
Chester Cooper, also minister for tourism, aviation and investments, speaking ahead of the weekly Cabinet meeting said the Davis administration and Grand Bahama’s economy could not afford for Electra America Hospitality Group to keep delaying progress.
“Electra consistently asked for more time. We cannot continue to delay and delay. The art of making a deal is knowing when to move on,” he said. Electra indicated to us that due to changing circumstances in the marketplace, which we all are aware of - increasing cost of debt and financing, mainly by the increase in interest rates in the global markets; the increased cost of construction; the threat of a recession. The reality of the marketplace is where they found themselves.”
The Government, through Mr Cooper, first unveiled the $100m Grand Lucayan sale to Electra America in early May 2022. However, the deal was really a Memorandum of Understanding (MoU) that gave Electra 60 days to conduct due diligence and pay a $5m deposit.
There was no confirmation, though, that the deposit was ever paid. The due diligence period, which expired in mid-July, was then extended until later than month before being lengthened for a further 45 days to mid-September 2022. Electra than asked for, and was given, a further week’s grace before due diligence was extended for a fourth time to November 15, 2022. The Government announced the deal’s collapse a week before that deadline.
Mr Cooper added: “In the intervening period, we announced that we did have an agreement for sale. It was subject to due diligence, subject to agreeing to the Heads of Agreement. In that intervening period Electra has advised that things changed, and we simply cannot continue to wait.
“Therefore, we took the decision to move on. There are credible interests from potential buyers for the resort, and we have begun those conversations. In the final analysis we hope to be able to do what’s in the best interest of Grand Bahama and what’s in the best interest for the Bahamian people.”
Hinting that the Government may have learned its lesson, and will not announce the Grand Lucayan’s purchase prematurely, Mr Cooper added: “When we have a deal we will make the announcement. We’re going to ensure that we have something definitive to tell before we make further announcements.
“The reality is that this is a very complex deal in a complex environment. We understand what it takes to make the deal happen. We’ve had a good deal before. We believe we will be able to conclude a deal on the hotel.” Mr Cooper added that Colliers International, the Canadian-headquartered realtor contracted by the Government to manage the resort’s sales process, will continue to vet potential suitors including the unnamed party that the Government is presently talking to.
“Colliers has done preliminary due diligence on the entity,” Mr Cooper added. “We’ve indicated that it’s an entity with deep pockets. They’ve done recent transactions in the hospitality space. We’re not going to say more about that at this time. These are sensitive discussions, these are complex transactions, and the marketplace at the moment presents a complicated set of scenarios…
“The threat of the recession, increasing costs of construction, changes in the global market, increase in interest rates really has presented a set of circumstances that need to be navigated by any buyer.”
This is the second time in three years that a deal to acquire the Grand Lucayan has failed to conclude. The previous Free National Movement (FNM) administration, led by Dr Hubert Minnis, signed an agreement to sell the resort to the ITM Group/Royal Caribbean joint venture just weeks before COVID struck. With the pandemic delaying progress on a closing, and ITM/Royal Caribbean seeking to water down the terms, the Davis administration agreed to part ways after taking office.
Mr Cooper yesterday dismissed suggestions that the present condition of Grand Bahama International Airport was a major factor in the Grand Lucayan’s sale not proceeding. “I’ve heard these speculations and some of them are pretty wild,” he added.
“I would say I’m not going to speak to the stewardship of the former Board, and we’re going to move forward. I’m going to speak to the stewardship of this Board and this government… There are many people who are speaking. You have no moral authority to do so, and no credibility on these matters to speak on them, quite frankly, and they’re looking for relevance.
“We are committed to doing the ongoing refurbishments. We are refurbishing the domestic facility that was there to ensure that when Bahamasair comes on November 17, when Sunwing comes later in the month and we have our guests from Charlotte, North Carolina, and the additional airlift from Florida and we’re putting heads and beds across the island of Grand Bahama, that we could facilitate them smoothly.”
The Freeport Airport Development Company has narrowed the potential private sector partners for Grand Bahama International Airport’s redevelopment down to two, Mr Cooper said.
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