The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Fears were growing last night that the government is scrambling for alternatives to re-open the Grand Lucayan amid concerns that the Wynn Group's $70m purchase may not work out.

K Peter Turnquest, deputy prime minister, yesterday confirmed to Tribune Business that "developments" had occurred regarding Freeport's still-closed "anchor" resort property but declined to provide any detail.

He added, though, that the government "will handle" whatever occurred, and pledged that the Grand Lucayan "will not close" - again without giving specifics.

"I'm not prepared to talk about that quite yet," Mr Turnquest said, when asked whether the Wynn Group acquisition was in danger of foundering and key hotel/airlift operators had withdrawn. "There are developments, but I'd want to know what the solution is before talking about that.

"Whatever it is it'll be handled. The hotel will not close. We continue to have conversations about the best approach to deal with it. I don't really want to get into it at this point."

Tribune Business contacted Mr Turnquest, also the east Grand Bahama MP, after multiple sources suggested Wynn's tax concession and marketing/airlift support demands were proving difficult for the government to stomach.

This newspaper was also told that Sunwing, the Canadian tour operator, and its Memories hotel brand affiliate, had withdrawn from plans to come in as one of the Grand Lucayan's resort operators under Wynn's ownership. Memories had previously operated one of the complex's three resort properties, only to pull out in Hurricane Matthew's aftermath amid a dispute with current owner, Cheung Kong (CK) Property Holdings.

Mr Turnquest's comment that "the hotel will not close" was later explained by two Tribune Business sources as a reference to warnings from CK Property Holdings, the entity into which all Hutchison Whampoa's real estate assets were placed, that it plans to close the one Grand Lucayan property still open by end-September and walk away if no buyer is found.

Another government source close to the Grand Lucayan situation was also guarded, while hinting heavily that the Minnis administration is exploring alternatives to Wynn, the Toronto-based real estate developer.

They said it was "not entirely true" to suggest the Wynn purchase had foundered, and that Sunwing had withdrawn, although they conceded that the hotel brand/operator line-up may be adjusted.

"It's not so much Wynn as to who the operating companies will be. It's reached a very delicate stage between two possibilities," the source said.

"The Government has to make deals in the best interests of the people and the Commonwealth of the Bahamas. If somebody feels it's not the best deal, you have to look at Plan B. The Government has never dismissed Plan B and C."

The strategy for re-opening and revitalising the Grand Lucayan has always seen Wynn solely as the 'real estate owner', with a variety of hotel and casino brands operating the property on its behalf as part of the Government's drive to convert the area into a true destination that is no longer reliant on taxpayer subsidies.

However, well-placed sources yesterday revealed to Tribune Business that the Government is exploring alternative buyers to Wynn amid suspicions its deal as structured "is not going to work" and "doesn't make sense" - especially given the added pressure from CK Property Holdings warning that it will walk away.

"Wynn is expecting the Government to pay for it, and they walk in as owner," one contact, speaking on condition of anonymity, told Tribune Business. "I can tell you the Government isn't interested in that, and has no choice but to start to look for another buyer immediately.

"Hutchison [CK Property Holdings] has said that come September that's it for all of it. Hutchison has confirmed that, in very short order, it will close the entire plant down. The tower and 200 rooms in the Lighthouse Point.

"The Government of the Bahamas is going to have no choice but to step in and quite literally take over operations of that hotel regardless of what the cost may be." The source added that CK Property Holdings' exit decision was being driven by the end of its Hurricane Matthew-related insurance payouts, with the final one set to be released by end-August or early September.

The latest developments come just weeks after it was revealed that the Government has allocated $25 million in the 2018-2019 Budget for an equity stake in the Grand Lucayan's purchase, plus the provision of airlift and marketing support.

Speaking to Tribune Business on this last Friday, Mr Turnquest gave no hint then that the Wynn deal was in trouble, only suggesting that this newspaper should "stand by" for what he hinted would be positive news about the resort's future.

This newspaper had been informed the Government was planning to take a 20 per cent equity stake in the purchase, and Mr Turnquest said this was designed to ensure Bahamian taxpayer dollars invested in marketing/airlift subsidies were recovered at "the back end" through future profits.

"I don't think it has been that much," he added of the 20 percent figure, "but there has been some consideration to that in recognition of, whether we're giving marketing or airlift support, the Bahamian people should benefit in a tangible way.

"We are looking at it from that perspective. If we're involving Bahamian tax dollars, we ought to benefit from it on that side."

The Grand Lucayan's post-Matthew closure has resulted in much of the property being shuttered for 21 months, causing the loss of over 1,000 jobs and 59 per cent of Grand Bahama's hotel room inventory - effectively taking the island off the stopover tourism map.

Another Freeport contact, speaking on condition of anonymity, expressed fears that the city and wider island were now in danger of missing a third winter tourism season amid the growing uncertainty over the Wynn deal's fate.

"The Government have blown it," they told Tribune Business. "Another whole year, another winter is at risk. Our economy could be irretrievably lost. You can't begin to turn Freeport around without that hotel being open. The town is a ghost town. It's very scary, and very difficult to get another buyer to come into a tourism economy."

CK Property Holdings had been running a sales process for the Grand Lucayan when it was interrupted by Hurricane Matthew. Wynn then emerged as the potential buyer with a $110 million offer just prior to the 2017 general election, but was unable to close the deal. It walked away, and the Minnis administration then revealed its plan to take an ownership stake in a purchasing group.

This prompted Wynn to return with a $65 million all-cash deal, which was accepted by CK Property Holdings. The Government suspended its plan, and the two companies signed a Letter of Intent (LoI) for the Grand Lucayan's purchase just before Christmas 2017.

Prime Minister Dr Hubert Minnis suggested then that the purchase would close by end-2018, but no deal was forthcoming and the Grand Lucayan's fate has dragged on for four more months with no resolution seemingly in sight.

In the meantime, Wynn has broken ground on its $120 million Goodman's Bay condo-hotel in New Providence. Paul Wynn, its principal, reassured that negotiations on the Grand Lucayan were making progress, but gave no specifics and was very vague.

Tribune Business sources have previously suggested that the former Christie administration encouraged Wynn to look at the Freeport-based resort in returning for helping to sort out covenant and zoning restrictions that were then-impeding its Goodman's Bay development.