The Tribune

By NEIL HARTNELL

Tribune Business Editor

AN Eleuthera-based resort project's chairman yesterday said between $50-$60 million had been invested in its build-out over the past seven-eight years, telling Tribune Business the absence of any bank debt had given it "a humungous advantage".

Explaining that the nature and pace of Cotton Bay's development had been deliberately tailored to account for global economic conditions and market demands, Frankyln Wilson said the investors had reached a point where "a big decision" had to be made.

This was whether to grass Cotton Bay's golf course, as doing so would incur maintenance costs reaching "a couple of million dollars a year".

Pointing out that an average 50-60 construction workers had been employed at Cotton Bay over the past year, Mr Wilson said construction on both the clubhouse and 50 villas had been completed.

Unable to describe the final form Cotton Bay would take when all development was finished, Mr Wilson added that the investors were following the development model pioneered by E. P. Taylor, noting that it took some 50 years for the latter's Lyford Cay to approach full build-out.

Acknowledging the setbacks that Cotton Bay had experienced in the aftermath of signing a 2004 Heads of Agreement with the Government, Mr Wilson said it had been hit by a combination of the global recession and the failure of its initial contractor, Edward Penn, to fulfill the obligations under his contract.

"The facts are that once the contractor was unable to meet the initial contract, that was a significant blow to the development, and then the recession came, which was the second blow," Mr Wilson told Tribune Business.

"Neither of those stopped us. We were able to partner with a significant group of individuals, the GBC Group. They came together to partner just with us. We have carried on.

"We have built the clubhouse there, the largest single building on the island of Eleuthera, and some 50 villas. We have gone a long way to building the golf course, which we think will be very special," he added. "We've reached a stage where a big decision has to be made - to put down grass."

Such a move, Mr Wilson explained, would see Cotton Bay incur an extra expense of "a couple of million dollars a year" to maintain the golf course. This was typically done when the economy was on an upswing, and the project chairman indicated this point had not been reached yet.

Describing the investment in Cotton Bay to date as "certainly north of $50-$60 million", Mr Wilson told Tribune Business: "We're going to be slow, we're going to be deliberate, but we're very optimistic about the future.

"It's a modest pace, and part of our strategy to keep doing sufficient. If you just leave a building sitting there, things start to go wrong. We're moving forward at a pace that prevents that from happening."

Cotton Bay, he added, was able to choose its own build-out pace because it owed no bank debt, meaning there was no pressure for instant profits and cash flow to make the associated repayments.

Mr Wilson said: "The key for us is to stay away from debt. We owe no bank no money on this project, on Cotton Bay, and that gives us a humungous advantage to go at our own pace."

Asked what form Cotton Bay would take when construction development was eventually completed, Mr Wilson replied: "Who knows?" Implying that the investors are hunkered down for a long-term project, he added: "Don't forget it took Lyford Cay 50 years to build out.

"People really forget that. After 50 years there are still a lot of lots left. The good news for us is that if we stay away from bank debt, we can respect the reality of economic cycles. Economic cycles are real, and we always have to respect the reality. Staying away from bank debt allows us to do that."

Indicating that Cotton Bay had embraced the development model used by Lyford Cay's founder, Mr Wilson added: "In my humble opinion, so much of the economic future of the Bahamas is anchored around a business model that has not changed much from E. P. Taylor: going after the high-end market, which is what Cotton Bay is doing; having a clubhouse that reflects the highest standards, which is what Cotton Bay is doing; and villas, which is what Lyford Cay went with and Ocean Club is doing. We're doing that.

"Villas are the way to go, because they give you density. You have to have high-end amenities, which is what we're doing, and you have to have a marina to allow people to bring in yachts, which is what we're doing.

"We have two private cays that allow us to send people, such as honeymooners, to a 20 acre and seven acre cay. The business model has not changed much from E. P. Taylor."