Ritz owners deny threats
(CNS): The new owners of the Ritz-Carlton have refuted accusations made by the premier that they threatened government in any way over the concessions they wanted in order to pay the outstanding duty owed by the former owner of the hotel. Executives from Five Mile Capital, which owns RC Cayman, the new owner of the resort, said the concessions they were looking for were normal given the planned investment in the asset. James Glasgow and David Lattimer also denied that the sale of the hotel at auction last month was in any way undervalued. Despite all that, they would still like to work with government as they move forward with the much needed investment in the property.
The owners estimated that government will receive more than US$12 million in stamp duty on the recent sale, and with major plans for the resort, there is significant potential for more earnings for government and local business. Speaking to the press on Wednesday morning. Glasgow stated that the list of concessions that were requested were never set in stone and open for negotiations, but despite what he described as "Herculean efforts" on their part, government would not respond.
He pointed out that the Dart Group has been offered a 50% break on taxes on properties they are investing in, but RC Cayman was not looking for anything like that, merely concessions on import duty, a chance to buy the land, a break on work permits and other benefits that could all have been negotiated to the point where both sides were happy.
The two men also noted that the sale of the Ritz- Carlton was based on a legitimate price following an independent local evaluation and was also agreed by government. He said the hotel was sold at $177.8 million because that was the reserve price and no one else bid at the auction.
Glasgow explained that after marketing the planned sale across the globe to well over 1,100 investors, only three groups showed an interest but in the end there was only one bidder in the room besides Five Mile on the day of the auction.
Although the executives did not name the other bidder, he was described as a well-known local investor who had the liquid wealth to purchase, leaving the press in no doubt that it was Dart. The executives said that this one other bidder declined to accept the opening bid as he stated it was too high.
“Were the hotel worth anything like $400 million, we would have had hundreds of investors wanting to bid given a reserve price of $177.8million,” Glasgow noted, “But no one else wanted to bid.”
Had Dart been successful in purchasing the five star resort, given the existing deal between government, the NRA and the developer as well as the pending mega deal that government is expected to sign anytime, the public purse would have had to give up 50% of all taxes at that resort for the next ten years.
However, with no deal on the table between government and the new owners, they are nevertheless pressing on with the investment and changes at the resort. Glasgow pointed out that, regardless of claims by the premier that the firm is obligated to pay the $6 million owed by the former owner, lawfully that is not the case.
He also warned that any attempts to press for a transfer fee based on the value of the hotel made some five years ago when Ryan was raising the financing would price Five Mile out of being able to properly invest to preserve the diamond rating, which may even lead to the closure of the luxury resort.
The executives explained that as a firm dealing with institutional investments such as universities endowments and pension funds, they take a long term view of investments and said they now needed to stabilize this asset. The main long term goal, Glasgow and Lattimer explained, was to gradually increase the value of the hotel through an injection of money, to recover the current loss between the value of the debt and the current value of the resort and beyond so that when the hotel is sold in the future it may well be worth $400 million.
According to government’s new television channel the premier is planning to make a statement regarding the outstanding duty at 7pm this evening.
Related article on CNS:
Category: Politics
Is it true that Dart have bought Treasure Island? I heard that on the marl road yesterday.
If they did, my bet is they bought it for the land. I remember during the pre-Ivan bankruptcy it emerged that the TI site covers a lot of ground.
I just hope this is true and they bulldoze the place. I lived there for a while, the old resort is a tip and while the condos may look nice the build quality in some of them is Third World.
Simple. End all concessions for everything. You want to build, invest, operate in Cayman do it at the published established fees. No local gets the same breaks when building a house or starting a business. About the back duty, well, want your licenses to work then all back bills are due now in full. Account needs to be current to get your business license, liquir license and hotel license. Period end of story done. No dealing needed to under the table scams either.
The point is that in this economic environment Cayman needs to provide those incentives for outside investment or it won't happen. It may simply not be worth their while without it.
Simple for simpletons, yes, but its not quite that easy
Seems to me a certain real estate company did not get their usual consulting feeout of this transaction, hence a certain someone who claims to be eternally honerable is making life difficult for these investors. THESE ARE EXACTLY THE TYPE OF INVESTORS CAYMAN NEEDS. Just because certain sections of the ruling classes have not benefited, means to me these new owners have some integrity, and should be welcomed by the wider community.
One does wonder if the refusal by the government to deal with the new investors has anything to do woth the perceived loss of face by Ryan and Ryan's close relationship with Bush.
The question I see arising:
"Is the Premier letting his personal views get in the way of benfitting this country"
From the evidence he gives out duty waivers like treats at halloween, so why not this company? He says he wants to encourage investors to come to Cayman, but in this case he is going out of his way to make life difficult.
How is this going to benefit they people he is supposed to be representing.
And as for the Ritz being worth 500 million, something is only worth what someone is willing to pay. The fact that the only other investor to show up for an internationally marketed sale of a prestigeous hotel, thought 170 million was way to much to pay tells you that RC Cayman probably overpaid.
I have a feeling that any plans RC Cayman have for developing will be about the first thing the CPA will reject in the last 4 years no matter how reasonable the proposed plan.
Whilst I understand the venom towards McKeeva, lets not forget that any shortfall in Stamp Duty will be a loss occasioned by us, the local taxpayers. I therefore hope that there is great scrutiny of this auction, which was conducted under the direct and exclusive control of the sellers who turned out to be the buyers in the end. This should immediately raise a red flag and, no matter what Conyers or the buyers/sellers say, we should not accept that this auction was conducted fairly or even marketed properly. And why is it that they can’t identify who the other buyer was? Was it a secret auction then? If so, thn there’s even more reason for concern. I would like to hear from Dart whether it was them or was this person just some spoiler put there to lend apparent legitimacy to ths sale. This was NOT a court ordered or supervised transaction and so there really was no oversight by anyone other than the seller/buyer. In fact, I find it shocking that this was done so quickly while there is pending litigation regarding ownership and control of the Ritz companies and there is the outstanding issue of unpaid duties, which the new buyer, who is admittedly owned by the Sellers, is conveniently now stating it has no liability to pay. I would suggest that everyone involved go and have a read of the Stamp Duty Law, and in particular the penal provisions which create the offence of avoiding Stamp Duty, including the sanctions that can be brought against any professionals who assist clients in avoiding Stamp Duty.
I am therefore hopeful that Mr. Obi and the evaluation office examine this deal with at least the same degree of scrutiny that they normally exercise with large land sale transactions, and that when they do, they have the balls to do what needs to be done, because something really stinks to high heaven with this deal.
You did read the bit about 1100 potential buyers being contacted, only 3 expressing interest, right? And you do understand that the entity is under the control of independent receivers? And that the seller went to court twice to have the sale authorised, only no one turned up at the first attempt to sell? And last but not least, you appreciate that amounts due by the companies for the repayment of unpaid prior duties are the companies responsibility, and do not attach to the land, right? After all, otherwise you would be saying that if anyone bought a house which a bank had foreclosed on, they would have to pay the guys unpaid mortgage on top of what they paid for the house.
If you are looking for something stinking, how about the sudden discontinuation of repayments of duty immediately after the last change of government? How about government failing to put those entities into liquidation, which would have involved a court supervised investigation of the pre appointment affairs of the companies that you apparently desire, and which coincidentally would render void any disposals of the companies property designed to put assets and cash beyond the reach of creditors? Or the Premier sitting alongside Mr Ryan at the recent Ritz Carlton conference. Something smelly alright – but its not the new owners dodging stamp duty.
Curious the Ritz since 2009 was not pushed by the Premier to pay any of the $6 million owed to the Government. He has today been mute on this; but we understand his relationship with Mr. Ryan. Now all of a sudden the new owners of the Ritz, Five Mile, are taken a verbal beating. The Premier said I believe that he had been in discussions with the new owners prior to their purchase of the Ritz. Could it be that hands emerged from under the table empty? The hardest tumble a man can make is to fall over his own bluff.
You just hit the nail right on the head.
“but RC Cayman was not looking for anything like that, merely concessions on import duty, a chance to buy the land, a break on work permits and other benefits that could all have been negotiated to the point where both sides were happy.”
Oh is that all you are asking for ? My bad.
LMAO!
Yes, just the usual for investors in this economic climate. Why wouldn't they ask?
Dear RC Cayman,
Don't worry, none of the sane people in Cayman believe anything that Mac says. We know when he is on a crazy blaming rant that it is nonsense. The West Bay voters believe him. But they are probably not within your local key demographics, unless some of your guests wish to sample local ganja and cocaine.
You bone head, not all West Bayers support or voted for Mac, so don't broad brush us as all the same. As to drug users, I guess there are non in your district? If you have nothing sensible to say, spare us and keep it to yourself.
Proud West Bayer
Just get back our XXXX $$$$!!!! Bracer
There are some empty threats here too.
They aren't about to close the hotel and walk away from a $177 m. property.
The Art of Lying – premiering by the premier!
"Had Dart been successful in purchasing the five star resort, given the existing deal between government, the NRA and the developer as well as the pending mega deal that government is expected to sign anytime, the public purse would have had to give up 50% of all taxes at that resort for the next ten years."
I think it's important for all of us to chew on that statement, and realize just how far down the rabbit hole our current government has taken us.
Not surprising, the premier blaming someone else again! He has cost the Cayman Islands ANOTHER $6 million by avoiding the Ritz Carlton creditors, yet he is blaming them & saying they threatened him & the government. That tyrant is truly amazing (in a terrible way).
How right you are! This gift follows neatly on from Ryans little present, but dwarfes it, and if anything at all is to be believed, the proposed deal with the Chinese gave away large slices of income, so, what were the Islands to live on, and what would they use to pay the legions of otherwise unemployable civil servants?
You know, either that man is even stupider than he looks, or he is setting up deals that someone else gains from, because it certainly isnt Cayman that is winning!
for mac to claim he is a real estate professional…. his ignorance of market values is astounding…….
"his ignorance of market values is astounding……."
Grammar Lesson: Always use fewer words if you can
"his ignorance is astounding……."
There. Much better.
you can't beat a bit of bully!
don't forget cayman can be led but is harder to push……zzzzzzzz
the bully bush doesn't like the taste of his own medicine….
BUSH: Just LIES, LIES. LIES. He can't just say as it is. FXXX Him.
I heard of a man who was corrupt to the core. Eveything he ever did was for his own benefit. He had no problem with selling, giving away, prostituting his country so that he could profit from it. While the rest of the people in the country was going about their business , trying to make ends meet he was up all night plotting and planning for his own benefit but lo and behold he was also plotting his own demise. Finally he got his comuppence. This true story will continue in May 2013
…if not before.
These are the investor we want in this country. ! thank god!
I think you made a spelling mistake, any threatening was probably done by Mac,Gangnam Style.