THE SEARCH CONTINUES: Grand Lucyan deal falls through as purchaser can’t secure financing

THE SEARCH CONTINUES: Grand Lucyan deal falls through as purchaser can’t secure financing
The Grand Lucayan resort on Grand Bahama.

NASSAU, BAHAMAS — The search continues for a purchaser for the Grand Lucayan Resort as the Electra America Hospitality Group has advised that it has had difficulty securing development financing at terms that would allow it to fully execute the vision outlined in its business plan.

Julian Russell, chairman of the board of Lucayan Renewal Holdings Limited confirmed the setback in a statement last night.

“EAHL has advised that shifting global capital markets and related inflationary pressures resulted in higher construction costs and costlier access to credit,” he said.

“Accordingly, the company had difficulty securing development financing at terms that would allow it to fully execute the vision outlined in its business plan. Given this, the closing deadline of November 15, 2022, is not possible and negotiations with EAHL have come to an end.”

Russell noted that the Board is currently in active discussions with a well-capitalized entity that has expressed its interest in acquiring the Grand Lucayan Resort.

“The entity has a vision for the property and a track record of having recently completed notable transactions in the hospitality space. Colliers has vetted this interested party in line with its due diligence guidelines.”

“The Board will keep the public updated as developments occur. The Board of LRHL remains committed to ensuring that a credible plan and shared vision for the Grand Lucayan is realized – a plan that will provide jobs, entrepreneurial opportunities and strengthen Grand Bahama’s economy in the best interest of the people of Grand Bahama and the entire Bahamas,” said Russell.

He noted that in the meantime, the board will complete functional renovations to the Lighthouse Pointe buildings. “We are also working with airline partners and the Ministry of Tourism to derive tangible benefits from the significantly increased airlift to Grand Bahama Island. We welcome opportunities with Bahamasair from Raleigh, NC, and Florida; American Airlines from Florida and Charlotte, as well as Sunwing from Montreal and Toronto. With this boost, Lighthouse Point is forecasting steady occupancy levels and continues to employ approximately 140 Bahamians,” Russell noted.

The government announced on May 11th that Lucayan Renewal Holdings LTD signed an agreement with Electra American Hospitality Group to buy the Grand Lucayan Hotel for $100m. At the time it was noted that the deal was subject to a due diligence period with closing no later than 120 days.

Back in early August, the Board of Lucayan Renewal Holdings said that the sale of the Grand Lucayan Resort was “progressing steadily and on track for completion”. A release from the board at that time said “we anticipate no other material changes.”

Electra America had committed to providing an estimated $300 million in construction and renovation funding to rebuild the Grand Bahama resort. The construction phase is expected to produce 2,000 jobs, with another 1,000 permanent jobs expected once the resort was fully reopened.

Speaking to his company’s commitment to the project, Electra America Hospitality Group Chief Executive Officer Russ Urban previously stated: “We are excited about Grand Bahama Island, and as we move forward with closing the deal, we reassure the people of Grand Bahama of our commitment to developing a world-class resort and collaborating on community development initiatives.”

The government purchased the resort in August 2018 for $65 million amidst heightened criticism over the move that was reportedly done to save hundreds of jobs at the resort. A letter of intent (LOI) was signed in March 2019 for the intended purchase of the mega-resort and the redevelopment of the Freeport Harbour. The plan included the development of a cruise port at Freeport Harbour that was expected to accommodate three ships in phase one and up to seven ships in subsequent phases.

The Davis administration ultimately canceled the agreement with RCL/ITM for the sale of the beleaguered resort and initiated its own sale process.