Hotel Bidder Irate
Wednesday, June 16, 2004
One of the companies trying to purchase the 280-room Treasure Islands Resort
has withdrawn its bid after becoming dismayed with the process by which it
alleges that Scotiabank is handling the sale.
Petra Properties Ltd, which is one of several bidders for the Resort,
informed the Legal Counsel for Scotiabank in Toronto of its decision on 8 June
through its attorneys in the Cayman Islands.
As reported in Cayman Net News last week, it now appears that pending
approval by a Cayman Court and by the Scotiabank head office, that the Resort
will be sold the developer of the Ritz-Carlton Grand Cayman for usage as housing
for construction workers initially, and then after the project is completed, for
housing of Ritz-Carlton staff and family members.
The Treasure Island Resort was put into receivership last September, but has
remained opened under management of the Receiver while Scotiabank seeks a
purchaser for the property. Originally, Bruce John and Mark Parchment were named
as the Receivers, but it is understood that Jeff Coyne took over that role
approximately in October 2003.
Patrick Murphy, Director and President of Petra Properties, said he was led
to believe by Scotiabank that his company had been the selected bidder for the
purchase of the property. “Near the bidding deadline in April, Mr Coyne told me
that we were the number two bid, and that if St Matthews University dropped out,
we would be number one.” Reports have indicated that St Matthews University did
eventually drop out of contention for the Resort.
On another occasion, Mr Murphy said Scotiabank’s Bruce John told him he was
the successful bidder. “It was just before Easter and Mr John told me we won the
bid. I asked him to repeat what he’d said, and he once again said we had won the
bid. The very next day, he denied saying it and asked me never to call him
again. There were eight people in the room, including two attorneys, who heard
him tell me we won the bid.”
Luke McCoy, General Manager of Treasure Islands has signed an affidavit
indicating that Mr Coyne dislikes Mr Murphy. “On one particular date… the
Receiver and I were meeting in my office and he said that he thought that
Patrick Murphy and his group, Petra Properties, were “little red necks” from
Alabama and they do not have sufficient funds to purchase the Hotel,” he stated
in the affidavit.
On another occasion, Mr McCoy stated in his affidavit that Mr Coyne told him,
“I will do whatever it takes to ensure that the Petra Group is not successful in
the purchase of the hotel” and that he was heavily leaning towards the
Ritz-Carlton Group.”
Regarding Petra’s ability to provide the sufficient funds to purchase the
hotel, which is in the range of $15 million, Mr Murphy said his investment group
provided Scotiabank with a United States bank reference stating it had a $25
million net worth in March, but that no one from Scotiabank had ever called his
bank in Alabama to verify its authenticity.
Mr Murphy does have a successful project under his belt in Cayman, having
purchased and stratified Caribbean Courts. In less than two years from when he
purchased the project, Mr Murphy said he would have the bank paid off in full.
Other sources of frustration in the Treasure Island purchase process for Mr
Murphy and Petra Realty include the inability to receive basic information
pertinent to the sale from the Receiver. “We asked for a list of chattels in
April, but we still have no list,” said Mr Murphy, “We asked for details about
the Ritz rental contract, like how much they’re paying, how long the agreement
is for, and how they pay, but they won’t give us that information.”
Approximately 126 rooms at Treasure Island Resort are currently being used by
Ritz-Carlton Grand Cayman construction workers under a lease agreement.
In the end, Mr Murphy said his company had no choice but to drop out,
especially considering the lack of cooperation with, and animosity from, the
Receiver. “We’ve spent a lot of time and more than $100,000 doing our
due-diligence and in attorneys’ fees. It’s not viable for us to stay in any
longer. If they put a new Receiver in there, we’re willing to step back up to
the plate and buy Treasure Island, but the way it stands now, we simply won’t.”
The proposed sale to the Ritz-Carlton Group has met with a variety of
opposition. The Executive Committee of the adjoining Treasure Island
Condominiums opposes Ritz-Carlton Group because it does not like the idea of “a
subsidised housing project” next door, fearing a drop in condo property values,
difficulty in renting their units to vacationers, and a loss in value to
significant capital improvements made in recent years.
Last week, the Minister of Tourism, Hon McKeeva Bush, said that he did not
support the sale to the Ritz Carlton Group either because he did not want to
lose anymore hotel rooms on Seven Mile Beach.
On Monday, the Minister responsible for Housing, Dr the Hon Frank McField
also said that he did not support the sale to the Ritz Group. “I concur with the
Minister of Tourism that to take that many rooms out of the tourist market would
be detrimental to Cayman Islands tourism,” said Dr McField. “Treasure Island
caters to a specific tourist income group. We’ve already lost the Sleep Inn,
which also catered to that income group, and to lose Treasure Island as well
could negatively impact our tourism, which is currently experiencing an increase
in stay-over visitors.”
Efforts to reach Mr Coyne for comment were unsuccessful due to his being off
the Island.
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