As of the end of March, the government has invested $47 million in the acquisition of the Grand Lucayan resort in Grand Bahama, the Ministry of Finance revealed in its “Nine Months Consolidated Fiscal Snapshot and Report on Budgetary Performance” report.
The government purchased the property for $65 million last year, with an initial capital investment of $32.4 million.
Since then, another $14.6 million was directed toward Lucayan Renewal Holdings Ltd., the special purpose vehicle established to acquire the Lucayan properties in Grand Bahama.
“Acquisitions of financial assets continued to be dominated by the government’s investment in Lucayan Renewal Holdings Ltd. (LRHL). Following the initial capital investment of some $32.4 million, the government made additional contributions aggregating $14.6 million towards LRHL’s operating costs, bringing the total investment to $47 million by the end of March 2019,” the report notes.
As a part of its purchase agreement, the government accepted responsibility for paying the severance pay for 164 workers at the resort, which was $3.2 million in February.
Minister of Tourism and Aviation Dionisio D’Aguilar announced on Tuesday that an agreement had been reached to pay $4.4 million in voluntary separation packages for 91 managers of the resort.
In March, the government signed a letter of intent with Royal Caribbean Cruises Ltd. (RCL) and the ITM Group for the purchase of the resort and the redevelopment of the Freeport Harbour at a price of $65 million.
Responding to the budgetary performance report, Progressive Liberal Party Deputy Leader Chester Cooper called the characterizing of the Grand Lucayan investment as an equity acquisition inherently disingenuous.
“We paid out cash and incurred debt through a mortgage with Hutchison Whampoa to essentially nationalize a hotel that is losing money, that we acquired for significantly more than the reported appraised value,” he said in a statement yesterday.
“The sale is nowhere near imminent and will not be complete by the end of this fiscal year. Much of it is an expense, plain and simple. As are the funds associated with running it and separating employees. Only in the make-believe world of FNM accounting does this not count as expenditure and the deficit projection isn’t blown.”
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