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Tucker’s Point put into receivership; resort will continue to operate as normal

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Tucker's Point put into receivership; resort will continue to operate as normal

By Marina Mello

Tucker's Point has been placed in receivership with debts of more than $150 million.

But the luxury resort's 300 staff have been assured that it will not be closing and that their jobs are safe.

According to receiver Ernst & Young, the receiverships are to effect a financial restructuring, and the resort will continue to operate as normal.

The facility is owned by Bermuda Properties Ltd (BPL), which has an outstanding loan with HSBC Bermuda of more that $100 million. The majority of an additional $50 million of debt is owed to Argus and BF&M — a level of debt too high for the resort to support, according to the receivers.

Ernst & Young teams were at the resort yesterday to begin meetings with employees, while Bermuda Industrial Union representatives will also be meeting with staff today.

“Staffing levels will continue to be set according to the operational needs of the resort,” Roy Bailey of Ernst & Young said.

“The fact the hotel has gone into receivership does not mean it will immediately result in job losses.”

Mr Bailey pointed out that bookings for October are strong, with most weekends sold out, and that all bookings will be honoured.

“The hotel will not be put up for sale anytime soon” he said, adding that a change in ownership may not be coming for months or possibly even years.

“We have a very open mind on that timeline,” he said.

The 88-room hotel, beach, golf and fractional residence club, managed by Rosewood, opened in 2009 after a massive redevelopment of the Tucker's Town property. But BPL lost more than $1 million each month from the start of 2009 through the end of August 2010.

In 2011, the company fought a heated public battle for a special development order (SDO) to expand and build dozens more luxury multi-million-dollar homes on the property that it said would be sold to help repay its loan with HSBC Bermuda. That position is now under review, according to Mr Bailey.

A statement from Ernst & Young said: “The receiverships are to effect a financial restructuring and the resort will continue to operate as normal.

“The receiverships only affect the companies that own the property and do not affect Rosewood Hotels & Resorts LLC, who will continue to operate the resort and golf club on a business as usual basis. Guests and members — both present and future — should have continued enjoyment of the facilities Tucker's Point has to offer and are all encouraged to do so.

“As is customary in these circumstances, the receivers will be undertaking a review of the companies and their operations in conjunction with Rosewood, and that will be done on the basis that it remains business as usual.”

Mr Bailey added: “Tucker's Point has been experiencing financial difficulties recently and a restructuring of the companies that own the property is required to secure the resort's long-term viability.

“The appointment of receivers is part of a debt restructuring and will not affect the operation of the resort. The proposed restructuring should put Tucker's Point in a better position to continue operating as a flagship Bermuda resort in future seasons.”

Major shareholders of BPL have included Charles Trippe of Massachusetts; Edward Trippe, Morgan Guaranty Trust Company of Ohio; and Basic, Inc of Virginia.

Tourism Minister Shawn Crockwell said Government was “disappointed” by the news.

“We had hoped it could have been avoided,” he said. “Despite rising occupancy rates, the resort operation has been struggling for years with significant debt challenges, as was highlighted in the Legislature's 2011 debate to approve its expansion plans.

“Although we are not aware of all the details, we are encouraged by the fact that Rosewood Hotels and Resorts has agreed to continue operating the luxury property on a business-as-usual basis.

“It is a sign of confidence by one of the world's leading hoteliers.”

The “setback” offers an opportunity to restructure the resort's financial situation, he added.

“Rosewood Tucker's Point is an outstanding property — world class in its setting and facilities — whose best days are ahead, and Government will work with management and staff to support its future success.”

Those views were echoed by Tourism Authority chairman designate David Dodwell, who described the news as “tough” and said he felt “very badly” for the Trippe family, which has invested heavily in Bermuda for several years.

He described Tucker's Point as a “first class resort” with excellent facilities and service, but that mixed use resorts had suffered recently.

“Bermuda needs a Tucker's Point type of resort to be successful and my belief is that this can be turned around,” Mr Dodwell said.

“This is an opportunity for reorganisation and I would like to see this as a turnaround for Bermuda Properties.

“It also underscores the need for an independent Tourism Authority to be up and running. One of major planks of the authority's plan is to foster hotel development which would help restore and evolve Bermuda tourism.”

Tucker's Point is the third resort to be placed in receivership in three years. In 2011 Newstead Belmont Hills — the first new resort in Bermuda in 35 years when it opened in 2008 — was placed in receivership by Butterfield Bank. It is understood to have cost around $70 million to build.

Pink Beach Club, which closed in 2010, was also put in receivership by Butterfield. It finally found a buyer this year — Frank Palmer's PBC Holdings — after sweeping concessions were offered for the $12.5 million sale. After a major overhaul it is to reopen next summer and be managed by Capella Hotel Group.

In receivership: The Tucker's Point resort
In receivership: The Tucker's Point resort

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Published September 13, 2013 at 9:00 am (Updated September 13, 2013 at 12:33 am)

Tucker’s Point put into receivership; resort will continue to operate as normal

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