NASSAU, BAHAMAS — Bahamas Ports Investment Limited (BPI) had sought to purchase the Grand Lucayan Hotel for $50 million in addition to seeking a $33 million loan financed by taxpayers, Deputy Prime Minister Chester Cooper revealed in Parliament today.
Cooper delivered a communication on the sale of the Grand Lucayan to the Electra America Hospitality Group, a deal that was canceled by the Davis administration.
He said: “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.”
Cooper continued: “By November 2020, the BPI “best and final offer” for the purchase of the hotel property was for $50 million with the government contributing $100 million in cash concessions to BPI over a 12-year-period. To be clear, this meant that the government of The Bahamas was asked to pay around $10 million per year directly to the purchaser to help with redeveloping the property. This was in addition to other concessions and caveats.”
“For example, of the $50 million purchase price, BPI asked for an upfront $12 million concession payment to be credited toward the purchase price. Also included in the $50 million sale price was a government loan to BPI.”
He added: “To be more specific, BPI proposed to develop the property in three phases rather than two, whereby initially only 25 rooms at Lighthouse Pointe would be opened in 2022, to be “grown with demand,” as opposed to the original 500 rooms Breaker’s Cay Hotel by mid-2022.”
Cooper explained that under the previous proposal, the buyers wanted a mortgage of $33 million from the government to buy the property and in addition, the government was to pay back $100 million to the buyer in cash concessions in addition to a myriad of tax concessions.
He noted that 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 $10m – $15 million to be spent before any transaction is completed even on its current trajectory.”
According to Cooper, the government expects that its deal with The Electra America Hospitality Group for the Grand Lucayan resort will be completed by September at the latest, with renovations and new construction to commence no later than January 1, 2023.
He said: “We expect this deal to be complete by September at the latest, with renovations and new construction immediately after but no later than January 1, 2023. Construction will be phased and some components of the resort will remain open at all times.
“Electra intends to retain current staffing levels that now exist as a minimum, in the operations, during the construction phase. All renovations and construction are expected to be complete by January 1, 2025.”
Cooper said: “With the first renovated hotel to come on stream at the beginning of 2024. The casino renovation is expected to be complete in the summer of 2024, and the other renovations and new builds coming on stream from the beginning of 2025 through the summer of 2025.”
He noted that the resort reconstruction and reopening are expected to create approximately 2,000 construction jobs and 1,000 permanent jobs, with at least 80 percent of all jobs going to Bahamians.
Electra is currently conducting an Economic Impact Assessment to pinpoint the level of economic growth it expects to generate but government estimates that the total direct investment into the property is expected to be in the $400 million range.
