By NEIL HARTNELL
Tribune Business Editor
A former Grand Lucayan chairman has urged the Davis administration to “come clean” with the Bahamian people over its efforts to sell the resort after it last week granted a third extension to the buyer’s due diligence time.
Michael Scott KC told Tribune Business “the boot is on the other foot” after he, the Board that he chaired and the former Minnis administration had to face “scathing criticism” from members of the now-current government over both the Grand Lucayan’s September 2018 purchase and subsequent failed efforts to sell the property to the ITM Group/Royal Caribbean consortium.
Speaking after the present Grand Lucayan Board late on Thursday night confirmed that Electra America Hospitality Group had been granted another seven-day due diligence period extension, taking both sides to a new Thursday deadline fort the buyer to pay the required $5m deposit, Mr Scott would not be drawn on whether he thought the proposed sale was in trouble.
However, he reiterated his belief that no potential Grand Lucayan purchaser - Electra or otherwise - would close a deal without an “ironclad, bullet-proof assurance” that the Government will redevelop Grand Bahama International Airport in accordance with the standard and timeline required to facilitate a return on hundreds of millions of dollars in investment.
“The Board of Lucayan Renewal Holdings has been asked by the attorneys for Electra America Hospitality Group for a further seven-day extension to consider outstanding matters related to the sale. The Board has granted that extension,” it was announced last week, as the US-headquartered buyer received its third due diligence extension.
Given that the purchase was unveiled during May’s second week, the originally-announced 60-day due diligence period was due to expire in mid-July. That was extended to early August, and then another 45-day extension was announced until September 15. Last week’s was the third granted to Electra, as both sides seek to turn their Memorandum of Understanding (MoU) into a binding sales agreement with a $5m deposit paid.
Several sources said the short seven-day nature of the latest extension indicates Electra’s Grand Lucayan has reached the crunch stage, or decision time, where both sides have to determine if they can reach an agreement and the sale will proceed or if they will walk away. The Lucayan Renewal Holdings media statement indicates that the doubts lie on the buyer’s side.
Mr Scott told Tribune Business: “I think as I told you before that there’s going to be a series of unremitting delays until they are able to give any impending developer an ironclad assurance on the airport.
“Quite frankly, having regard to the criticism that was levelled at my side during the emergency period and following the pandemic; the scathing criticism levied at my side by the now current deputy prime minister and minister of tourism, investments and aviation, they should be running to the public with an explanation as to why they require a third extension.
“The position is even more telling. They need to come clean with the Bahamian people who are no doubt anxious and waiting on a full explanation. At the end of the day, they are going to have to face the music and pay the piper. Because they were so aggressive and venomous in the way they attacked us coming out of the pandemic, there’s no honeymoon on this one, I’m sorry.”
Asked whether he believed the Electra America sale was in difficulties, Mr Scott replied: “If there’s a fourth extension then I’ll answer that question. If you are really cynical, as I tend to be, what you’ll think is that by giving minimal extensions, one week here, two weeks there, it is to keep it under the radar.
“It comes down to a single economic proposition: Who is going to stick a quarter-of-a-billion dollars into any property anywhere on Grand Bahama without assurances that in a reasonable period of time there will be a purpose built, state-of-the-art, 21st century airport that is fully functioning.....
“Who’s going to do it? Money never sleeps. A book I’m reading says the price of time is interest or investment income. How do you generate that in this case, especially with the circumstances you have at this particular point in time without a fully functioning airport that has the capacity to generate the throughput of tourists in any reasonable number to generate a return on investment? It’s not going to happen. You don’t have to be the head of the Federal Reserve or RBC to work that out.”
Michael Pintard, the Opposition’s leader, yesterday said the latest Grand Lucayan sale extension was “both troubling and disheartening to the residents of Grand Bahama” given that the deal remains critical to hopes of turning around and reviving the island’s long-moribund economy.
Suggesting that uncertainty over Grand Bahama International’s Airport redevelopment “is in some way hampering the closure of the sale of the Grand Lucayan”, he added that any new owner will find it difficult “to deliver on the occupancy levels that it has projected”.
“We are now on the third extension of that closing,” he added of the Grand Lucayan, and the entire nation is worried that deputy prime minister Cooper will not deliver as promised,” Mr Pintard added. Calling on Mr Cooper to “say the course”, he reiterated that the former Minnis administration acquired the resort to prevent it becoming another Royal Oasis through its abandonment by Hutchison Whampoa’s real estate arm.
“In short, the deputy prime minister needs to deliver urgently on his long overdue promises of selling the Grand Lucayan and redeveloping the Grand Bahama International Airport,” the Opposition’s leader said, while calling for more information on the latter deal’s progress.
Magnus Alnebeck, Pelican Bay’s general manager, told Tribune Business he had briefly encountered Electra America executives on Grand Bahama last week and said the latest due diligence extension could be a positive sign. “At least we know they are still interested and haven’t walked away from it,” he said. “I am sure there is a valid reason for it.
“If they are asking for this extension it means they are doing due diligence in-depth and are still keen on doing it. They are still on the ground and obviously interested in it. After six years since Hurricane Matthew [and Memories’ pull out], one more week or a couple more weeks is not going to make a big difference.
“We have had a lot of deals in Freeport and a lot of ground breaking ceremonies over the past 20 years, and many of us are cynical and are taking the approach that we will believe it when we see it. There’s an element of that. Now we are living in a world that changes every day. The pandemic is behind us, but there are a lot of variables we don’t know. The only thing that is certain is the uncertainty.”