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Bahamas: The $65m Grand Lucayan deal “is not a cataclysmic event”

The $65m Grand Lucayan deal “is not a cataclysmic event” for the Government’s finances, a Cabinet minister argued yesterday, insisting: “We think we’ve hit a home run.”

Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business that the purchase price paled into insignificance when compared to the $2.636 billion recurrent spending budgeted by the Minnis administration for the 2018-2019 fiscal year.

Defending the Government’s hotel acquisition from critics he described as “armchair quarterbacks”, Mr D’Aguilar said it was only paying $30m of the purchase price this fiscal year – a sum that was just $5m greater than what it had originally allocated to support the failed Wynn Group purchase.

The Minister admitted the Government is “taking a risk” through its intervention, and “history will judge” whether it “hits a home run” – as it believes – or “strikes out” as critics such as Fred Smith, the Freeport-based QC, anticipate.

Comparing the Grand Lucayan situation to a baseball game, Mr D’Aguilar said the Government could ill-afford “to sit in the dug-out and do nothing” as current owner, Hutchison Whampoa, closed the property and the majority of Freeport’s stopover tourism industry.

He pointed to the nearby Royal Oasis as an example of shuttered resort properties that had proven impossible to re-open, and described the Grand Lucayan as “a rounding error already written off” by the Hong Kong-based conglomerate.

Mr D’Aguilar revealed that Cheung Kong (CK) Property Holdings, Hutchison Whampoa’s real estate arm, had been threatening to close the resort since the May 2017 general election, and it was only the Minnis administration’s intervention then that kept the Grand Lucayan open “for as long as it has been”.

With CK Property Holdings’ patience wearing thin as the Hurricane Matthew insurance payments ran out, and Wynn withdrawing from the purchase, he argued that the Government was faced with “an emergency situation” that left it no alternative but to act.

Mr D’Aguilar also confirmed to Tribune Business that appointing a brand operator/management company to run the Grand Lucayan was the Government’s “second choice”, and would likely only be considered if a quick sale was not achieved.

He added that the Minnis administration was not keen on adding an extra layer of cost, and to become a landlord, given that such a scenario would likely incur increasing losses for Bahamian taxpayers.

Mr Smith and others have blasted the Government’s Grand Lucayan purchase as “economic suicide”, and a move that will “plague” Bahamian taxpayers and the Public Treasury for years to come, but Mr D’Aguilar countered that its economic importance to Freeport meant it could not be allowed “to wither and die”.

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