As information over the government’s purchase of the Grand Lucayan resort in Grand Bahama comes to light and previously unknown costs continue to accumulate, former Minister of State for Finance Michael Halkitis asserted yesterday that it seems as if the government got “the short end of the stick” in negotiations that lacked goodwill.
“I’m shocked that it seems as if, in this whole negotiation process, I don’t see anything to the advantage of The Bahamas,” Halkitis told reporters.
“It seems Hutchison is getting the price that they wanted, at a valuation that is higher than the pre-hurricane appraisal that is in the public domain. They are getting a guarantee. They are getting to lend the government money at [an interest rate of four percent per year], so they are getting a return on it.
“My initial reaction is it doesn’t seem like we got any advantage. It seems that we ended up not only paying the full price, but we ended up paying the taxes, the severance that might be due to employees; we are subsidizing the losses. Where do we win in this deal?
“It looks like a bad deal for us. It looks like the government of The Bahamas did not negotiate a good deal for itself. We are just paying all of the costs… It doesn’t appear that there is any goodwill in this whole agreement. It just seems as if we got the short end of the stick, quite frankly.
“I don’t know who negotiated on our behalf, but you would think that if the government of The Bahamas agrees to take this hotel off of their hands — a hotel that has been on the market for many, many years — you would think the terms would be more favorable to us. But it just seems as [if] the government, and hence the people, the Bahamian taxpayers, are just holding the bag.
“The difficult thing is, at first we heard $65 million was for the hotel, and now every day it seems it’s ‘plus, plus, plus’. So what’s going to be the final figure?”
At the beginning of August, Prime Minister Dr. Hubert Minnis announced that the government had decided to purchase the Grand Lucayan resort after The Wynn Group withdrew its bid to purchase the property, citing the high costs of operating on Grand Bahama and the final purchase price as the company’s reason for pulling out of negotiations.
The government is purchasing the resort for $65 million — $30 million up front and $35 million on a three-and-a-half-year government-guaranteed mortgage.
A resolution obtained by The Nassau Guardian is expected to be tabled in Parliament today as the government seeks approval to borrow $35 million to complete the purchase of the resort. The $30 million was paid by an advance from the government’s contingency fund, the resolution notes.
The resolution seeks to do two things: authorize the government to borrow the funds from Hutchison Lucaya Limited and Bahama Reef Limited and authorize the treasurer, on behalf of the government, to execute the guarantee.
The resolution details how the government will repay the loan: seven tranches of $5 million every six months for three-and-a-half years, with an interest rate of four percent per year, paid quarterly.
This means that the interest on the loan represents another $4.9 million, which will be paid in $350,000 installments every three months.
The government will also pay Hutchison Lucaya Limited (HLL) over $1 million to cover the operational losses of the Lighthouse Pointe hotel as part of its purchase of the resort.
According to the resolution, the government decided to “purchase in the public interest”.
Prime Minister Dr. Hubert Minnis is expected to make a communication about the sale today and explain the government’s reasons for the purchase.
However, Halkitis said yesterday he doesn’t hold much hope for the prime minister to provide any clarity on the matter.
“If recent experience is any teacher, I don’t expect to get any clarification [from the prime minister],” he insisted.
“As a matter of fact, it might become even cloudier, but we’ll wait and see.
“The prime minister promised a national address to lay out the strategy and the transaction and all of that; we’re still waiting on that.
“And now he’s promised to give an address in the house on Wednesday, September 19, laying out all of the reasons and supposedly to make the matter clearer. I don’t expect anything to be clarified.”
The resort features three brands: Memories, Breaker’s Cay and Lighthouse Pointe.
It was damaged by Hurricane Matthew in 2016.
Only the 200-room Lighthouse Pointe reopened after the storm.