The final offer given to government by Bahamas Ports Investment Limited (BPI) to purchase the Grand Lucayan Hotel was for $50 million, but asked the government for an upfront $12 million cash credit and a $33 million loan financed by taxpayers, according to Deputy Prime Minister Chester Cooper.
Cooper said the government was also asked to give BPI $100 million in cash payouts over 12 years to help develop the property, in addition to a host of tax concessions.
“The new proposal also asked the government to provide a $33 million mortgage as part of financing of the $50 million purchase price in an amortizing loan with a two-year grace period, a one-year interest only period and repayment over 10 years at an interest rate of six percent for the first five years and eight percent for the last five years,” said Cooper, minister of tourism, aviation and investments in the House of Assembly today..
“So, for posterity let me recap: We paid $65 million for the resort. We had agreed to sell it for $50 million. The buyers wanted a mortgage of $33 million from us to buy the property from us. In addition we were to pay back $100 million to the buyer in cash concessions in addition to a myriad of tax concessions.
“The board of [Lucayan Renewal Holdings Limited] did not find that proposal to be in the best interest of the government or the Bahamian people and said so publicly. And upon coming to office and reviewing the proposal, the new administration concurred, to put it mildly.”
He also said BPI asked for a five to six-year grace period before having to develop the property.
Cooper, who gave a communication on the sale of the Grand Lucayan, said up to last September, the hotel received a total of approximately $150 million in direct government subsidy.
“We estimate that there have been millions more spent throughout the process in indirect costs and an estimated additional $10 million – $15 million before any transaction is completed even on its current trajectory,” Cooper said.
“The new proposal was not a realistic or palpable arrangement after our significant investment on behalf of the taxpayers.”
BPI, a joint venture between Royal Caribbean International and the ITM group, agreed with the government to mutually end the sales process after the Davis administration came to power in September 2021.
Cooper announced last week that Electra America Hospitality Group, an American company, has entered into an agreement with the government to purchase the Grand Lucayan Resort for $100 million, with a commitment to spend $300 million renovating and redeveloping the property over the next three years.