The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A neighbouring developer yesterday rejected the $2.8bn Ginn purchaser's "demand" to lease marina fuel facilities for $1 per year as "silly", while reaffirming his desire to co-operate with its plans.

John MacDonald, president of Island Ventures Resort Club (IVRC), the company formed by Old Bahama Bay's condo owners to keep the resort alive following Ginn's 2011 collapse into bankruptcy, revealed the offer made by Skyline Investments during the two sides' first formal meeting two weeks ago.

He added that IVRC and the Toronto-based developer had been kept apart, and prevented from interacting previously, by Lubert Adler, the Philadelphia-based investment bank, which was Ginn's original financing partner and is now one of two sellers seeking to sell the West End-based project and other assets to Skyline.

"When we had our only meeting with them, they [Skyline] made a demand of is and said: 'We want to lease those facilities [the fuel dock servicing the Old Bahama Bay marina] from you and are only willing to pay $1 a year'," Mr MacDonald told Tribune Business. "I was like: 'Who came up with that kind of figure?'

"These are properties that I have purchased for real money. Leasing these facilities to Skyline for $1 per year is just silly. That is why I am not releasing any licenses or permits to Skyline as they are to operate our property, and have zero to do with the Lubert Alder/Skyline deal."

Tribune Business revealed yesterday how Skyline's proposed $2.8bn revival of Grand Bahama's West End, which promises to create 1,400 full-time Bahamian jobs, has been delayed by concerns relating to the marina assets, licences and leases held by IVRC and Mr MacDonald.

In particular, the Customs and fuel docks lie on an 18-acre land parcel acquired by Mr MacDonald for his own multi-million dollar Grande Harbour resort condominium project that was unveiled last week.

Tribune Business sources suggested Skyline Investments was delaying completing its separate acquisitions from Lubert Adler, and a lending syndicate headed by Credit Suisse, until it could either purchase or work out an agreement with Mr MacDonald for itself and its clients to have access to/use or the marina's fuel and Customs facilities.

Mr MacDonald yesterday reiterated his pledge to co-operate with Skyline Investments' plans, but said IVRC would retain its existing hotel, marina, retail and gasoline station licences because these all related to facilities that were operated by the condo owners and were not part of the former's deal with Lubert Adler.

"We remain ready and willing to cooperate with Skyline in an effort to make all entities successful for the Bahamas and West End," he told Tribune Business. "We're trying really hard on our end. I've got my arms open, and we'll do what we can to help them get their licences.

"I'm pretty optimistic. If people are talking you can work anything out. It's in their park. Well see."

Mr MacDonald, in an e-mail sent yesterday to Gil Blutrich, Skyline's chairman and president, confirmed that he and IVRC had accepted the second marina lease termination notice from Lubert Adler - the first having been "determined by our attorneys to be defective".

While that addresses one concern, Mr MacDonald reiterated that IVRC's and his own assets/licences were not included in the deal with Lubert Adler. "IVRC has never leased the fuel and customs docks from Lubert Adler as they have never owned them," he wrote. "IVRC from the beginning has leased these from WERL ( West End Resorts Ltd).

"Regarding licenses and permits, when Lubert Adler gave up the resort operations, forcing the owners to form IVRC and operate the resort ourselves, Lubert Adler forfeited their licenses and permits."

Mr MacDonald continued: "Please understand that since we will be operating our fuel docks, we will not be releasing or transferring that license or permit.

"Additionally, since the condos are not any part of the Skyline purchase, we will not be releasing or transferring that license or permit as we will continue to operate our hotel business.

"Since we do have current marginal dock and are expanding our docks, we also not be releasing or transferring the marina license or permit as it is needed to run our marina operations."

Mr MacDonald added that the condo owners also planned to move existing retail concessions, run by local Bahamians, and which include a dive shop, golf cart and kayak rental, catering business and shop with coffee boutique, to their property once the Skyline purchase closes.

"As you are aware, there are facilities on the property where the fuel and Customs are," he wrote. "We will be moving our current retail operations from the leased facilities that are owned by Lubert Adler and into our facilities. Thus we will not be releasing or transferring the retail operators license or permits."

Tribune Business sources yesterday suggested that the complexities of purchasing the former Ginn property may have been under-estimated by all sides involved, due to the number of parties and interlocking landholdings/real estate jigsaw involved.

Multiple sources familiar with developments, and spoken to by Tribune Business, gave mixed views on the outlook for the Skyline purchase and relations with IVRC and Mr MacDonald. Some warned that the matter was likely to result in litigation, which could potentially freeze the $2.8bn project and its development plans for months, even years - although this now seems unlikely given Mr MacDonald's confirmation of the marina lease vacation.

Such a scenario would be the worst possible outcome for the Bahamas' economic interests, given the four-figure construction and full-time jobs that West End's revival is projected to create, and its role in creating a 'Smart City' that would boost the Government's ambitions to develop a technology hub in Grand Bahama.

Tribune Business sources also warned that Lubert Adler and the Credit Suisse group were becoming nervous following the earlier closing's miss, and did not want the deal to be delayed while Skyline Investments worked out the terms of its relationship with an unrelated third party.