Ginn Modifications of Provisions Bill Passed
Oct 10, 2011 - 11:29:49 PM
to the Ginn Act
has tabled a Bill to amend the
Modification of Provisions (Ginn LA-West
End Grand Bahama) Act.
House may recall that in 2005, the Government of The Bahamas concluded
a Heads of Agreement with Ginn-LA West End, Limited, the original Developer
of the Ginn Sur Mer Project at West End, Grand Bahama.
The 2005 Heads
of Agreement purported to grant the Developer considerable concessions
which were not permissible in law.
in 2008, sought to honour the Agreement made between the Government
and the Developer, and did so by enacting appropriate legislation to
give effect to the concessions provided for in the Heads of Agreement.
Accordingly, My Government enacted the
Modification of Provisions
(Ginn LA-West End Grand Bahama) Act 2008
(“the Ginn Act”)
Many of the
concessions in the Heads of Agreement related to the stamp duty rates
which would be applicable in certain circumstances. Clause 2.1.8(a)(i)
of the Agreement provided that the applicable rate of stamp duty for
sales of $250,000 or more shall be 2% for any unimproved lot sold by
the Developer during the period commencing on the date the Developer
shall sell the first unimproved lot in the Project and ending on the
date which is five years after the date on which the Developer shall
sell the first unimproved lot in the Project.
In 2008, My
Government concluded a Second Amendment to the Heads of Agreement.
Clause 2 confirmed and ratified that the date of the first sale of an
unimproved lot was the 12th day of October 2006. Accordingly,
the concession provided under this provision will expire, five years
later, on or about the 12th October 2011.
to the Mortgage
House is advised that the Ginn Sur Mer project is owned by the Developer,
as well as another company called Ginn-LA OBB, Limited, which was a
owns approximately 1,500 acres of the Project. The Developer mortgaged
its land as security for a loan of $276,750,000 in favour of Ginn-LA
Conduit Lender, Inc., which subsequently (in 2006) transferred its rights
to Credit Suisse AG, Cayman Islands Branch as Administrative Agent and
Collateral Agent for a syndicate of Lenders (“the Lenders”).
In 2008, the
Developer defaulted on the loan and the Lenders commenced steps to realise
their security. As at 2010, the parties contemplated amicable
measures to convey the Borrower’s equity of redemption to the Lenders
using the concessionary rate provided in the 2005 Heads of Agreement
and the Ginn Act 2008.
was advised that once these measures had proven unsuccessful, on 12th
May 2011, the Lenders commenced foreclosure proceedings in the Supreme
Court of The Bahamas. On 1st September 2011, the Lenders
filed to discontinue the foreclosure proceedings, as the parties again
determined that they would pursue a conveyance of the equity of redemption
in the mortgaged property.
to this effect were concluded and placed in escrow, pursuant to an Escrow
Agreement executed on 31st August 2011, between the relevant
parties. It is intend that a company owned by the Lenders, namely
G-LA Resorts (Bahamas), Limited, would become the absolute beneficial
owner of the mortgaged property.
of the Government – Amendments to the Ginn Act
of continuing the Ginn Project in respect of the mortgaged land, the
Lenders have requested that Government:
Approve an assignment
to the Lenders of the Heads of Agreement made the 9th day
of December 2005 between the Government and Ginn-LA West End, Limited,
as amended in 2006 and 2008;
Amend the Ginn Act
to include the proposed assignment of the Heads of Agreement
and to enable the Lenders to benefit from the Ginn Act as a Developer.
Act 2008, and Heads of Agreement, to enable the concessionary rate
of 2% stamp duty to be applicable beyond the 12th October
2011, but solely in respect of the proposed conveyance of the equity
of redemption from the Borrowers to the Lenders.
Allow no stamp duty
to be payable on conveyances or transfers of property or equity interest
in a property from a Developer to an entity wholly owned by members
of the resort community (for example, a homeowners association).
This is provided the property is for the benefit of the community.
It is contemplated that this would accommodate the transfer of roadways,
canals and amenities, which would otherwise have no intrinsic value.
My Government agreed and did so table the
Modification of Provisions
(Ginn LA-West End Grand Bahama) (Amendment) Bill, 2011.
In making such
a decision, My Government took into consideration:
The potential benefit
the continuation of this development would have on the economy of Grand
The capital invested
in the Ginn Project to date
The Lenders’ development
intentions once they become the absolute owners of the mortgaged properties.
has been advised that approximately $505 million have been expended
by the Developers as at 30th June 2011 on the development of the Ginn
Project. Besides land acquisitions and various legal and marketing
fees associated with the Project, the amount expended includes capital
works amounting to approximately $200 million including in respect of
Roads and canals
Beach club and gatehouse
The utility infrastructure
required for the Project
And a championship
18-hole golf course
have advised Government that it intends to continue the development
of the property once they have full ownership of the same.
has required that they do so in conformance with the plans and designs
previously approved in the Heads of Agreement, as it relates to the
is advised that the Lenders have engaged in extensive preparations to
continue the development of the residential component of the resort,
including market research and planning.
They have retained
Replay Resorts, a Canadian-based company which specialises in large-scale
master planned resort developments, to move forward with the development.
Project Timetable submitted to Government provides that during the first
six months following the Lenders becoming the absolute owners of the
mortgaged lands, they propose to focus on: master planning; re-engaging
the marketplace; commencing a builders’ program; construction of model
homes; and preparing for sales launch.
I am advised
that whereas the Lenders were prepared to execute the conveyances in
escrow, they are reluctant to close the transaction before knowing that
they would be approved to obtain the benefits and concessions provided
for by the
Ginn Act 2008 to enable them to carry on the development
as originally intended.
My Government has table the Bill to amend the Ginn Act before this Honourable
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