Morgan’s Point board will clarify funding set-up, says Burt
David Burt was unable to explain details of the funding and guarantee arrangements for the Government’s plan to convert the failed hotel project at Morgan’s Point into a residential development as he discussed aspects of last week’s Budget.
The Premier said that such details would have to wait until a board was established for a new company overseeing the project.
Mr Burt, who is also the finance minister, said that the 37-acre site in Southampton would provide opportunities in the hospitality, retail and service sectors with the phase costing an estimated $130 million and will be backed by a government guarantee.
In December, legislation to create a government-owned company to oversee the redevelopment of the Morgan’s Point hotel property was passed in the House of Assembly.
Asked to explain how the funding for the development and guarantees would work, Mr Burt told a post-Budget press conference: “No, I cannot. Not at this time.
“That is something that would be best done by the independent board when they finalise the arrangements that will be done.
“And once those matters are approved by Cabinet, I will be happy to share them with you.
“But those matters have not yet been approved by Cabinet.
“As I said in the Budget Statement, all of those things were yet to be determined, but we have given an outline of what has been presented to the Cabinet, and what the Cabinet does expect.
“The Cabinet as a whole will have the responsibility for ensuring that the project advances to meet the goals of returning as much value as possible to the people of Bermuda.
“I look forward to the announcement of the strong independent board that will be overseeing the development of this project.”
The Premier said that from the time the Cabinet gives approval, the project will take 39 months to complete.
During his Budget speech last week, Mr Burt said regarding funding: “Our present assumptions on financing consist of two debt tranches — a combination of a senior debt tranche secured against Morgan’s Point land and applicable assets as built, and a subordinated debt tranche provided by a local Bermudian bank, backed by a government guarantee.
“Both tranches will be backed either by security of the property or sovereign guarantee, thus minimising interest costs. Importantly, the construction and operation of Phase 1 will increase the value of the remaining land assets under the control of the Government and serve as a land bank for future development.”
The Premier said that the operation will generate cash returns to “more than cover the costs of construction” so that Bermuda can recoup funds that were paid out for the $165 million guarantee agreed by the One Bermuda Alliance for the previous plan for a hotel at the site.
In April 2011, three Bermudians swapped land they had purchased in Southlands, Warwick for the Morgan’s Point site. They proposed an 80-room boutique hotel with 313 additional residences and a 325-room luxury hotel with 337 additional residences.
However, funds ran out and work on the project ended in 2018.
A $165 million government guarantee was called on the debt and the Government has spent a further $50 million restructuring the project and paying other creditors.
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