There has been much speculation regarding the future of the Ginn Sur Mer resort development on Grand Bahama. While financial problems have been denied for months, the general economy and lack of buyers have finally forced the Chapter 11 filing. Many resort developments have closed throughout the Bahamas, Caribbean and Florida in the last six months.
By ROGAN M. SMITH,NG Senior Reporter
The global recession coupled with the housing downturn has triggered Ginn Resorts to file for bankruptcy protection for four of its projects, including the mega resort Ginn sur Mer in Grand Bahama.
The company recently filed Chapter 7 petitions for its entities. A Chapter 7 has more to do with liquidation, rather than a Chapter 11, which deals with reorganization.
In a statement released yesterday, the development company said two Ginn subsidiaries and certain other related entities had reached an agreement with their lenders with respect to certain defaults under loans totaling $675 million.
Ginn said the settlement is related to four communities, Tesaro, a private club community in Port St. Lucie, Florida; Quail West, a private club community in Naples, Florida; Ginn sur Mer, the resort community under development in Grand Bahama; and Laurelmor, a luxury mountain community under development in Boone, North Carolina.
"Sales at the four communities had been severely affected by ongoing economic pressures and the drastic downturn in the real estate market, which ultimately led to a default under the credit facilities in June 2008," the company said in the statement.
"The parties have been involved in extended negotiations with the lenders both before and after the default. These efforts have culminated in the execution of a restructuring agreement that forms the basis for the resolution of the outstanding defaults."
As it relates to Ginn sur Mer, the company said the parties have agreed to a joint venture agreement with respect to certain portions of the resort development.
"All parties worked toward a resolution that maximized both the value of the properties and the homeowners' interests," said Robert Gidel, CEO Ginn Development. "We believe the resolution reflected in the master restructuring agreement achieves the best possible result for each of the projects under the circumstances."
State Minister for Finance Zhivargo Laing told The Nassau Guardian on Monday that he first became aware of the bankruptcy filing after he read about it in the international press, but could not say whether his government was aware of the new development.
West End and Bimini MP Obie Wilchcombe said he was aware that the company had filed for bankruptcy protection for some of its properties, but doubted the filing would have a negative impact on the Grand Bahama development.
He said the company is "obviously trying to organize its financing".
"I believe that the property here in The Bahamas is going to be spared," he told The Nassau Guardian. "But, bankruptcy in this context is allowing for Ginn to reorder its financials. That's what you have to look at. They are obviously seeking to raise additional capital and seeking to do certain things. But, one of the good moves Ginn made earlier on was to secure funding for a significant portion of the project in West End in the front end.
"That is why they are continuing their work on the golf course, the vertical should start soon. The projects in the community are continuing. They just signed a $12 million contract with the Freeport Power Company for the erection of lights from Eight Mile Rock into the western area. They are continuing the Internet dredging at the property at Old Bahama Bay."
Wilchcombe said Ginn developers are trying to raise additional financing for their other projects, but noted that chairman and CEO of Ginn Resorts, Bobby Ginn has given repeated assurances that the project will move ahead.
"We're still optimistic. We understand the difficult time the world is going through now. Bobby Ginn is a major player in tourism in the world, certainly the United States of America. We're still optimistic and looking forward to the future," he said.
Wilchcombe also responded to concerns that a bankruptcy filing would jeopardize the project.
"We haven't heard anything in that regard. When I spoke with Bobby Ginn a couple of months ago, he told me that they had some $80 million to begin vertical [work] and they're going to be starting very soon — works on the golf course, dredging is continuing. Ginn also owns Old Bahama Bay and minimal layoffs took place there several months ago. So, they're continuing. We haven't heard anything to the contrary."
According to Standard & Poor's Rating Services — an international credit rating agency that gives regular reports on such developments — prior to the financial crisis in the United States, the government of The Bahamas expected more than 50 projects to begin in the country, worth more than $10 billion.
That financial injection would have drastically changed the economy in the next five to seven years, according to the report. However, it said the global economic crisis "dented these plans".
Ginn sur Mer was valued at $4.9 billion at the time of signing. The plan called for 2,000 acres of land, 1,400 home sites, 4,500 condo-hotel suites, two golf courses, a grand canal with water taxis and gondolas, a 55,000 square foot casino, two water theme parks, a 500-slip yacht marina, a private airport and other facilities.
The project was expected to take 10 years. The main idea behind the project is to alleviate the marina congestion in Florida by bringing yachts to Grand Bahama.
"In 2007, Ginn raised in excess of $300 million in lot sales, raised the land 10 feet above sea level, dredged for the creation of four to five miles of canals, staked out the golf course, purchased Old Bahama Bay and with money for residential infrastructure held in escrow and somewhat protected from creditors, is still tracking favorably despite Ginn's credit woes," the report said.
The project is still in the stage of infrastructural work. Vertical buildout was not planned in the first four to five years. Infrastructure and the marina are expected to be completed in the next 18 months to three years. Construction of the cabanas is projected to begin in July 2009. Ginn is also expecting to host its first golf tournament on its property in June 2009.
The Guardian attempted to contact Prime Minister Hubert Ingraham for comment, but calls were not returned up to press time.
Courtesey of Nassau Guardian
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