Barbadians welcomed the revelation by Opposition member of parliament Ronald Toppin that two Paradise Beach Limited bond holders had to be paid by government to the tuned of BBD120 million. There was also the view that government’s haste to dump its minority holdings in the former Barbados National Bank, now Republic Bank, was to ‘shield’ this transaction in the wash.
What Toppin’s intervention did was to force Minister of Finance Chris Sinckler to issue a clarification statement. BU understands the MoF’s explanation concerning the need to protect sensitive discussions by honouring non disclosure agreements. We also have applied similar understanding to the CLICO and Barrack transactions. Hell we understand why we the TAXPAYERS should not be told one damn thing. Those of us who understand the ramifications of the pending decisions will continue to live in hope that we will be told how a few people in smoked fill rooms will guide our future as well as our offspring.
In light of the Toppin revelation that government had to honour an obligation to two bond holders, how does this position the Barbados government? Can we draw a conclusion that the Barbados Government – or we the people – are owners of what use to be a picturesque piece of property at Black Rock?
.Extracted from the Facebook page of Avinash D. Persaud posted on Wednesday, January 25, 2012 at 12:44am (FB time). Persaud is the Executive Chairman Paradise Beach Limited which is known as Four Seasons. Please note item 5.
1. It is a 110-key, Four Seasons operated and managed hotel, at Paradise on the west coast, plus Four Seasons-serviced villas and apartments, in all occupying 33 acres.
2. The project was suspended in February 2009, as a result of the global financial crisis and the attendant collapse of private sector investment. This challenging environment, in which private investors are often looking for extreme, short-term-returns and un-Barbadian exemptions from labor and environmental laws, stymied a handful of previous rescue attempts.
3. If the project had failed, 300, largely Barbadian trade creditors would have been left with approximately $34m of debts being unpaid.
4. Seeking to avoid the adverse economic and reputational consequences of default and buying time to find a long-term solution, the Government guaranteed a $120m loan from ANSA Merchant Bank. No Government cash was transferred but until the guarantee is fully released the Government will appoint 4 of the 8 Directors of Paradise Beach Limited.
5. If the guarantee is called by ANSA McAl, all lands and assets of Paradise Beach Limited will then transfer to the Government. The lands were independently valued recently at $200m.
6. At the centre of the long-term recapitalization plan, is sufficient funding to complete and open the hotel without depending on the timing of villa sales. This requires a further capital injection of $260m to complete and open the hotel. On December 9th, the Inter-American Development Bank’s private sector arm backed the recapitalization plan and obtained internal credit approval for an IDB-led syndicate of $180m. This is a commercial loan to a private entity, it is not a loan to the Government and is not guaranteed, though because the IDB is owned by Member States, the IDB requires no-objection from the Government.
7. In obtaining internal credit approval, the IDB credit committee commissioned independent studies on the commercial viability of the hotel and comparison with similar hotels. These studies indicated the hotel was strongly commercially viable in the long-term. The project’s financials were further vetted by PWC, the global accounting firm. The Government and all potential investors have seen sight of these reports.
8. The IDB-led syndicate will disburse $180m, once the IDB Board has ratified the decision of its credit committee – expected shortly – and the project has spent $80m of non-IDB loan proceeds. $60m of this $80m will likely come from NIS Barbados. This investment will be purchased in Barbados dollars but will pay out in US dollars providing much needed diversification for the NIS. The remaining $20m is expected from Four Seasons and other investors in current discussions with the Company. Four Seasons has only ever invested once before in its 83 operated hotels at the stage of pre-investment – because they are an operator not an investor with investment funds, investment committees and investment professionals – and is a measure of their confidence in the hotel.
9. There will be an initial 150 jobs within 4 weeks of disbursement to resume work on infrastructure and villas and this ramps up within 9 months of the disbursement to 1200 local construction jobs for 3 years when the construction of the hotel will commence. The 9 months will provide for the detailed drawings for the redesigned hotel to be completed and contractor appointed after the tendering process required by the IDB and ANSA is completed. There will be $700m of construction spend on the hotel and villas. On opening of the hotel there is expected 875 permanent local jobs and $100m of annual foreign currency receipts.
10. The presence of Four Seasons will bring to Barbados the marketing and branding power of the world’s number one hotel brand, which will significantly complement the marketing budget of the Barbados Tourism Authority and extend the Barbados brand to new and important markets.
11. IMF has not frowned upon the Four Seasons investment by the NIS, quite the opposite. The IMF is recommending the NIS diversify its assets more. Everyone would consider placing less than 2.0% of NIS investments in an investment that earns its returns from well-to-do tourists, not local tax-payers, is backed by the IDB – the world’s largest development bank – and Four Seasons – the number one hotel brand- and vetted by independent experts, as prudent diversification