The Barbados government recently announced that it has signed an MOU with Butch Stewart’s Sandals to manage the former Almond Beach Village property. BU family member Due Diligence has submitted the following research to inform debate.
Neal and Massey buys control of BS&T in 2008, and by 2012 has acquired all the shares of BS&T; and in May 2012 had the shares BS&T delisted.
“Neal and Massy Holdings Ltd’s (N&M) request to have its Barbados Shipping & Trading Company Ltd (BS&T) delisted from the T&T Stock Exchange (TTSE) was made as a result of the T&T-based conglomerate acquiring all 100 per cent of its shares. So said Gervase Warner, chief executive officer, N&M Group. “Last September we made an offer to the BS&T shareholders for the rest of the outstanding shares, and now that BS&T is 100 per cent owned by Neal and Massy, it becomes a subsidiary of Neal and Massy. “Now that we acquired all of the outstanding shares of BS&T…there was no opportunity for anyone to trade shares anymore.” BS&T’s delisting means change, Warner said. “What you can expect is that Neal and Massy would be a little more prominent in Barbados than it has been in the past. We will continue to respect the fact that BS&T has a long history and heritage in Barbados. “It is 100 per cent-owned by Neal and Massy, the parent company, there are no organisational changes above and beyond what we have already done.”
On May 28, 2012, the TTSE issued a statement notifying the investing public that: “Pursuant to an Order of the Securities Exchange dated April 27, 2012, made under Section 45 of the Securities Industry Act, 1995, BS&T would be delisted from the stock exchange effective Monday, May 28, 2012.”
In the BS&T purchase N&M got stuck with the shares of Almond Resorts Inc. (ARI), which was in a business with which they were not familiar. After two years of owning and operating (and feeding) ARI, N&M decided they did not want to continue pouring money into the ARI sink hole.
In April 2012, Warner had told the regional media that Almond was buckling under more than US$51 million in accumulated debt. “The challenge we had after the financial crisis is (that) it started to lose a lot of money, precious little capital or cash was left for upgrading properties, and that lead to more significant cash flow losses from those hotels.” Warner explained the situation got so chronic, the parent company needed to inject capital into the business. “We’ve had to support them with cash injections from N&M. We’ve got to a point where we feel we need to pass them into ownership hands, where people would be able to put the kind of capital into it, to have the performance of these properties turned around,” he said. Warner said the Barbadian economy is contracting and has faced such challenges as downgrading of the economy.
Five hotels—Almond Resorts Incorporated—were included in the February 2008 acquisition of BS&T, but those properties suffered from the global financial meltdown. And the huge debts were racking up. In N&M’s 2011 annual report, chairman Arthur Lok Jack said: “Given the uncertainty of the world economic environment and the significant investments necessary to upgrade the hotels in Barbados and St Lucia, the Group took the decision to substantially dispose of its investments in Almond Resorts Incorporated and its associated hotels.” The plan to sell-off Almond hotels was in the cards since 2011. In April 2012, Ralph Taylor, chief executive officer of Almond Resorts, said Almond Beach Village (Barbados) will close April 30 amidst “the deteriorating quality of the product.”
First to go were the two St. Lucia properties; one was sold and the management contract for the second which ARI managed was terminated. Then to the Barbados properties.
In July 2012 they sold Almond Beach Club, to Fairweather Holding Co., which operates Elite Island Resorts for $33 million, the proceeds of which was used to pay down bank debt that had been incurred to keep ARI afloat. Fairweather Holding Co., which operates Elite Island Resorts, has agreed to buy Almond Beach Club in St James for $33 million, but about $30 million of that sum is going to Scotiabank to reduce Almond’s outstanding debt to that institution. This was revealed in an information memorandum sent to shareholders of Almond Resorts Inc (ARI) yesterday, in which the board of directors urged shareholders to agree to the purchase.
What’s more, the remaining $3 million left from the purchase sum is going to be used to meet the severance obligations to the hotel’s 160 workers, who are expected to end their contract of employment with Almond. Fairweather Holding Co., a company incorporated in Nevis, has agreed to buy the hotel as a going concern and so the employees are expected to be rehired by it under new terms.
Do not know who owns Fairweather/Elite – maybe Bernie Weatherhead or Goddards? Anyway, Barbados problem number 1 is solved. Next up is the Casuarina.
Some time in 2012, N&M start negotiating with Jamaican hotel operator Couples to take over Casuarina. January 4, 2013, the Jamaica Gleaner reports the Couples is finalizing negotiations to purchase Casuarina.
“Couples Resorts is finalising a deal to acquire a hotel in Barbados, making it the first Jamaican resort group to venture into that market. It’s also Couples’ first venture outside of its home market. Couples chief executive officer, Glenn Lawrence, confirmed plans on Wednesday to purchase the 280-room Almond Casuarina Beach (ACB) Club in the eastern Caribbean island.
“We are involved in firm negotiations,” said Lawrence, adding that the deal was expected to conclude on or before January 31, at which time more details would be forthcoming.
For whatever reason, Couples did not purchase the property; but January 29, 2013, announced it had agreed to manage Casuarina ( it turns out)under a lease.
Glen Lawrence, CEO at Couples Resorts announced earlier this week than recent plans to undertake the 280 room resort known as Almond Casuarina Beach Resort, were a success and are in effect from February 10th 2013. It’s a truly exciting time for everyone at Couples Resorts, we consistently strive to be the best in the business, and this new venture means that under our management Almond Casuarina will undergo a US$3 million dollar refurbishment program, bringing the resort to the well-known 5* standards of Couples Resorts Jamaica.
Barbados Problem # 2 resolved – temporarily. Finally they had to solve the biggest problem of them all, Barbados Problem # 3, Almond Beach Village.
After inviting proposals in 2012, a short list of 3 bidders was agreed, Sandals, Doyle and a third unidentified bidders speculated to Jada/Preconco/Bjerkhamn. By April 2013 none of them was able to come to an agreement to purchase the ABV property.
Business Monday: No buyer yet for Almond Beach Village –4/29/2013
SOME buyers keen on acquiring Almond Beach Village (ABV) are in the process of organising financing to make the purchase. That’s the view of Chairman of Almond Resorts Incorporated (ARI), Arthur Lok Jack, and Director, E. Gervase Warner, as they revealed additional losses of the hotel Group. Almond Beach Village was closed last year – April 30, 2012, to be exact. On August 2, 2012, Almond Beach Club, another hotel in the Group, was sold to the Fairweather Group.
So far no buyer has come forward to acquire the property, although several parties have shown an interest – read full article
Having done their due diligence, the private sector investors, Sandals, Doyle et al, were not prepared to invest in the ABV property. So N&M turned to the buyer of last resort; the Barbados taxpayer. On September 11, 2013, it was announced that BTI (the taxpayer) had agreed to purchase the ABV property for $53 million.
The future of the Almond Beach Village property at Heywoods in St. Peter, as planned by Government, is starting to take shape.
Barbados TODAY has learnt that the Freundel Stuart Cabinet has determined it will purchase the property from Neal and Massy of Trinidad for US$53 million, with an initial cash payment of US$25 million and the balance of US$28 million being paid over three years at an interest rate that is still to be agreed between the two parties.
Additionally, after an initial Cabinet decision instructed the Barbados Tourism Investment Inc. to work with Sandals Resort International “to have a Sandals Beaches Resort in Barbados within three to four weeks”, that body last week determined that Sandals be given the nod to operate and manage a rebuilt Almond under the Beaches brand, with an option to purchase the property at a future date.
So having done his due diligence and deciding he did not want to (or maybe did not have capital) buy the ABV property, Butch Stewart arranged for Freundel Stuart buy it, demolish the old plant and equipment and build a new facility for him, Sandals/Beaches, to operate for Freundel and company, with an option to purchase the property at a future date.
What further concessions of the type Stewart negotiated with Grenada have not been disclosed; but having gained the practice of negotiating with one insolvent country, it seems reasonable to assume that he would take no less from another insolvent country.
As a bonus or as a further incentive or to save face, the Stuart/Sealy/Sinckler team, apparently arranged for Mr. Stewart to take over the Casuarina property, which N&M had leased to Couples and was rebranded Couples only months before.
One MOU will result in government leasing the Almond Village to Sandals which will operate it under its international brand, Beaches while the other contract, provides for Sandals to buy over the former Almond Casaurina property, in Dover, Christ Church, now Couples.
DD has seen no details, price, terms etc. of the deal to buy over the Casuarina property, included on the N&M website, so the deal to buy over Casuarina may be pending; or may turn out to be simply Sandals taking over its operations from Couples. What a deal. If, after running the new resort to be built by the taxpayer, Mr Stewart decides he wants to buy it he can. If not, he can walk away. Now that is really managing his risk.
Stuart, Sealy and Sinckler on one side of the “negotiating” table; and Stewart , his accountants and lawyers on the other side. Clearly, Barbados needed Butch more than Butch needed Barbados.
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