NASSAU, Bahamas, Nov 9, The Bahamas government says it will not be making any public statement regarding the sale of the Grand Lucayan Resort after the Lucayan Renewal Holdings Limited (LRHL), the special purpose vehicle established to sell the property, announced the collapse of the deal on Monday night.
Acting Prime Minister Chester Cooper had in May announced the sale of the resort to Electra America Hospitality Ltd. (EAHL) for US$100 million but is now telling reporters the government will not name another buyer for the Freeport property until it actually has a final agreement.
“We are going to ensure that we have something definitive to tell before we make further announcements,” he said.
“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.” Cooper told reporters, saying that Electra had consistently asked for more time.
He said there is credible interest from potential buyers for the resort and that the government has started “those conversations”.
The statement on Monday by LRHL came six months after the government announced that it had selected Electra as the purchaser and that the developer had committed to a US$300 million redevelopment of the resort.
Cooper had said then that Electra would create 2,000 construction jobs and 1,000 permanent jobs and that the Phillip Davis government “truly” believed that Electra would be good for Grand Bahama.
In its statement, LRHL said it would continue to work toward successfully closing the sale of the resort to secure the best outcome for Grand Bahama and the Bahamian people.
“Electra America Hospitality Ltd. was chosen overall for its vision and experience and evidence of financial backing. EAHL has advised that shifting global capital markets and related inflationary pressures resulted in higher construction costs and costlier access to credit.
“Accordingly, the company had difficulty securing development financing at terms that would allow it to fully execute the vision outlined in its business plan,” LRHL said, noting discussions are now taking place “with a well-capitalized entity” that has expressed its interest in acquiring the property.
The former Hubert Minnis administration bought Grand Lucayan from Hong Kong conglomerate Hutchison Whampoa in August 2018 for US$65 million.
In March 2020, the government signed heads of agreement with Royal Caribbean Cruise Lines (RCCL) and the ITM Group, which promised to invest more than US$300 million in the redevelopment of the property, and construction of a cruise port; however, the COVID-19 pandemic delayed and changed the terms of the agreement.
But the Davis administration canceled the deal, calling it bad, and promised to find a new buyer.
Meanwhile, Grand Lucayan’s former chairman, Michael Scott, said he is not surprised at the collapse of the deal.
He told the Tribune newspaper that the Davis administration is guilty of making the same mistake as its predecessor, given the need to deliver sufficient stopover visitors to guarantee the Grand Lucayan buyers a return on their investment.
He said, “nobody is going to invest $250 million unless they have an assurance on the airport”.
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