Former President Of The Grand Bahama Chamber Of Commerce Kevin Seymour yesterday expressed his concerns surrounding “not yet disclosed details” of the letter of intent with Royal Caribbean Cruises Limited and the ITM Group’s joint venture to transform and redevelop the Grand Lucayan Resort and the Freeport Harbour.
Mr. Seymour noted in a release that the Freeport Harbour is owned by Hong Kong based company Hutchison Whampoa and the Grand Lucayan was once owned by the fortune 500 firm.
The government purchased to hotel from Hutchison Whampoa for $65 million in August of last year in an effort to save Grand Bahama’s economy.
Mr. Seymour said, “I find it curious that Hutchison Whampoa, as the ultimate parent of the Freeport Harbor Company, name was conspicuously omitted, when the execution of the LOI was first announced by the Minister for Grand Bahama on March 27, 2019, during a press conference.”
He added, “for the avoidance of doubt, before any work can be done at Freeport Harbor, Hutchison and or its subsidiary would have to authorize it, moreover since the project involves capital works to the Harbour’s infrastructure, Hutchison or its subsidiary would need to be a party to the deal.”
The joint venture between RCL and the ITM Group is expected to invest a total of $195 million during the first phase of the project, which is expected to create some 2,000 jobs over the next two years.
Of the $195 million, $65 million will be paid to the government for the purchase of the Grand Lucayan Resort.
Mr. Seymour said, “whilst I appreciate that a LOI is only an agreement for the Government to enter into exclusive negotiations with the Joint Venture, there are a few matters that I feel need to be carefully considered by the National Economic Council, as well as the Grand Bahama Port Authority, prior to giving the aforementioned investment the green light.”
First, he questioned how the deal will be structured and if it could be considered “arms-length” or “incestuous” considering Hutchison is the owner of the harbor and former owner of the hotel.
He said, “on May 2, 2017, the former administration entered into a Head of Agreement with Carnival Cruise Lines, whereby Carnival agreed to construct a cruise port in Eastern Grand Bahama for $100 million? A lynchpin of the deal with Carnival involved the waiver of Hutchison’s exclusive rights to all Ports on Grand Bahama?”
He added, “how is the aforementioned investment agreed to by the Bahamian
Government with Carnival, likely to be affected by the proposed deal? Does this new deal contravenes any provisions of the HOA with Carnival?”
The government expects that under the terms of the deal, it will be able to recover its $65 million purchase price for the Grand Lucayan.
However, Mr. Seymour said, “I submit however that
before this determination can be made with any degree of certainty, one needs to fully understand how the operating expenses incurred by the Government since it acquired the Grand Lucayan will ultimately be absorbed and the amount of concessions (i.e. stamp duty and other concessions etc.), if any the Government is prepared to provide to the Joint Venture.”
With this in mind, he asked if the government’s announcement is “a mere legal illusion” or can it potentially be economically beneficial for Grand Bahama.
