The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Lucayan’s Board was last night said to have granted the resort’s prospective purchaser a further seven-day extension so that it could assess “outstanding matters” relating to the $100m deal.

Lucayan Renewal Holdings granted the week-long extension to September 22 at Electra America Hospitality Group’s request as the previous deadline to complete due diligence on the two sides’ agreement expired yesterday.

Both Chester Cooper, deputy prime minister, who has responsibility for tourism, investments and aviation, and Julian Russell, the Grand Lucayan’s chairman, declined to comment when contacted by Tribune Business yesterday. They each said a formal statement would be released either last night or today, and indicated they would refrain from speaking until then.

Many Freeport and Grand Bahama residents have been growing increasingly uneasy over the Electra America deal, and whether it will proceed to closing, given the repeated extensions to deadlines that come and go. Yesterday’s is the third to what was initially agreed as a 60-day due diligence period when the two sides agreed their Memorandum of Understanding (MoU) for the Grand Lucayan’s sale and purchase in early May 2022.

Efforts to secure a buyer who can transform the resort, and help make Freeport/Grand Bahama true tourism destination, have endured numerous false dawns with deals failing to come to fruition - not least the ITM Group/Royal Caribbean consortium’s proposal, which foundered largely due to COVID-19’s intervention.

The “outstanding matters” still being mulled by Electra America, and its financial and legal advisers, were not identified last night. However, Carey Leonard, a former Lucayan Renewal Holdings director under the previous Minnis administration, said was prepared to give the Government “breathing room” over the latest missed deadline.

Pointing out that the Grand Lucayan’s fate is inextricably linked to the pace and nature of Grand Bahama International Airport’s restoration, the Callenders & Co attorney told Tribune Business last night that politicians especially should stop setting deadlines for commercial deals that are unrealistic.’

“I said before that if it takes to Christmas to have a firm commitment, it wouldn’t surprise me,” Mr Leonard said. “I think there’s a tendency to set timelines that are not realistic. Politicians have a tendency to do that in particular. It’s not just this government. The last administration had the idea of selling the hotel within four months. It was just an absurdity.

“I said at the time, before I was appointed to the former Board, that it would take at least 18-24 months to sell the hotel, but everybody went rocketing off on four months and it just wasn’t going to happen. These deals take a long time to put together if they’re going to work. I’ll continue to give the Government breathing room on this one. I don’t expect it to be easy.”

Mr Leonard, though, did call on Mr Cooper to give investors, businesses and Grand Bahama residents a sense of direction as to what will happen with Grand Bahama International Airport’s redevelopment. “The airport will not be an easy thing for the Government to put together in any event,” he added.

“It would be useful for the deputy prime minister, as soon as he can, to give us some idea of where we’re going with the airport. It would be helpful, even if it’s not going anywhere for 12-18 months, to say so and businesses can plan accordingly.”

Airlift, and ease of access for stopover visitors, will be critical for any Grand Lucayan buyer especially as Grand Bahama - at least temporarily - no longer has a US pre-clearance facility. “The airport plays a part in it in the sense they’ve got to be able to get the airlift in so they can get visitors to the hotel. That’s going to be key,” Mr Leonard said. “It’s going to be the ability to have easy access for guests.

“You’re asking a foreign investor to make a very substantial investment; they can easily spend $300m-$400m. Before they do that they’re going to want to be satisfied they have the necessary infrastructure to support their business.”

Besides the Grand Lucayan Board and Electra America closing the hotel’s sale, the purchaser will also have to negotiate a Heads of Agreement for the project with the Government. Besides that document, which functions as the master agreement and sets out the broad terms and conditions of their relationship, Electra America also has to obtain the necessary planning/construction approvals and seal a Hotels Encouragement Act deal for its tax breaks/incentives.

Electra America’s plans involve three resort properties. A four to five-star branded luxury lifestyle hotel, featuring 198 rooms and 24 villas and targeted at corporate and leisure business; a four-star convention hotel with 535 rooms, featuring an amphitheatre and convention centre; and a 257-room condo-hotel style family resort with suites that are double the size of the Grand Lucayan’s existing rooms.

The buyer sought to show its continued interest in the purchase by the fact that the previous 45-day due diligence extension was announced via a joint statement with the Grand Lucayan Board.

Russ Urban, Electra America’s chief executive, was quoted as saying in early August: “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 August joint statement added that “no other material changes” to the sale’s closing schedule are presently anticipated, and that construction work and renovations to Grand Bahama’s ‘anchor’ hotel property will begin in January 2023 as planned. The Board said the sale was “steadily progressing and on track for completion”.

One Grand Bahama source, speaking on condition of anonymity, said Electra America had been speaking to owners of property immediately adjoining the Grand Lucayan about acquiring this real estate. Voicing scepticism that the Grand deal will succeed, they added: “They’ve been all over town trying to buy the adjoining properties and having talks. That means they’re trying to put a portfolio together so that they can offer a package.”