Boscobel Beach Hotel in St. Mary.
FINSAC boss Patrick Hylton yesterday said he would examine why a potential UK investor was forced to withdraw his interest in the Boscobel Beach hotel after waiting more than two months in an attempt to get information on the sale.
The news that UK chain, Exclusive Hotels, waited for weeks before pulling out surprised the FINSAC boss, who said he was unaware of the interest until Wednesday Business brought it to his attention.
The probe comes as it became clear that the Trinidad-controlled Guardian Life is poised to add the US$15 million all-inclusive hotel to its growing list of properties. A FINSAC spokesman confirmed on Monday that a deal with Guardian was close to being struck but declined to comment in detail.
But, the most embarrassing part of the transaction is that the preferred cash bidder for which the UK investor was spurned is now no longer in the picture and FINSAC has fallen back on its original plan to give the 207-room hotel to Guardian Life as part of its portfolio.
The FINSAC managing director admitted that the events surrounding the UK investors withdrawal "doesn't look good". He said he had initially proposed that the property go to Guardian but NCB had made it clear they preferred a cash offer, which FINSAC had pursued.
"I was surprised to hear about this and that no one contacted him with the information. I intend to ask the relevant people about this and find out what went wrong," Mr. Hylton said yesterday.
National Commercial Bank (NCB) placed the St. Mary hotel in receivership seven
months ago to protect its multimillion dollar mortgage on the property. It appointed Ainsley Mitchell receiver and manager of Jamaica Hotels, the company that owns Boscobel.
The move appears to have avoided potential legal problems over the sale of the company and running of the property, as the FINSAC controlled Mutual Life owned 88 per cent of Jamaica Hotels, while John Issa's SuperClubs owns the remaining 12 per cent. It also smoothed the way for a sale of the company's assets rather than the company itself.
However, documents obtained by Wednesday Business show that five star UK hotel company Exclusive Hotels was unable to get any information on the sale after weeks of trying. After writing to NCB he was pointed to the receiver, Mr. Mitchell, who has been handling the sale along with FINSAC.
Mr. Mitchell was unavailable for comment earlier this week.
Mr. Hylton said he was unaware of the Pecorelli interest but he would be asking both NCB and the receiver why he had not been notified of the interest from a potential cash bidder.
He said FINSAC's had pressed for a cash sale and was now surprised to hear that another bidder might have been interested. "I don't know why the receiver never sent the documents", he added.
"It would have been good to talk to the investor, not just about Boscobel but we have other properties he might have been interested in."
Exclusive chairman Giuseppe Pecorelli said on Monday that he withdrew his company's interest in the St. Mary property after the poor response locally.
This followed repeated attempts to get information since he first expressed an interest on June 13. The receiver asked for and received a signed confidentiality agreement on July 5, apparently in advance of sending out the sale memorandum.
But it never turned up and on August 11 Mr. Pecorelli gave a final seven-day ultimatum in which he wrote to NCB and the receiver: "I am extremely disappointed not to have received any communication from you in response to my previous correspondence and after having signed the confidentiality letter. I believe that it would be businesslike and polite to at least let me know if the property has already been sold or for whatever reason taken off the market."
Mr. Pecorelli added: "Normal courtesy between business people should always be the guiding light. If I do not hear from you within 7 days from today's date then you can consider my withdrawal of interest".
"Somebody should have responded if only as a matter of courtesy but it wasn't down to us to do that," the FINSAC spokesman said.
Speaking from London on Monday, Mr. Pecorelli said he was a long-standing "friend of Jamaica" and a regular visitor to the island.
Mr. Pecorelli said he was disappointed not to have at least received a reply to his final ultimatum on August 11, after waiting almost two months for details on the proposed sale.
Creditors
Mr. Pecorelli said: "The property's receiver has to try and get the best price for shareholders and creditors. I don't see how he can have done that if he never heard what we had to say."
Asked if he would reconsider bidding for the property if approached, he said he wouldn't rule it out but "the process doesn't give me confidence", he added.
Mr. Pecorelli's Exclusive group of six hotels and golf clubs are among the most luxurious in the UK and are five star rated. His long association with Jamaica stems from when he helped establish the Jamaica Pegasus as part of the then Forte hotel chain.
FINSAC actually began detailed discussions over the sale of the property with another group of investors. This group had linked with Lee Issa's House of Issa and its Couples operation, which would run the property, in an attempt to strike a deal but that has failed to materialise. That deal apparently broke down when the Government restructuring company asked for details of how the proposed purchase would be funded.
It is now understood that the Guardian deal, which was initially proposed, is now back on the table and awaiting Cabinet approval.
At the end of July, the Financial Gleaner revealed that Guardian would also get the popular Terra Nova hotel and restaurant as part of its portfolio.
As in that transaction, no cash will change hands. Instead, the deal will see Boscobel Beach become part of the assets handed to Guardian Life following its $1.1 billion deal in May 1999, for the individual life and pensions portfolios of Jamaica Mutual Life Assurance Society, Dyoll Life and Crown Eagle.
In May 1999, Guardian and local insurance firm First Life, which acquired the group life and health portfolios of the three failed companies, agreed that assets totalling $5.5 billion would be transferred to Guardian Life and First Life.
Some $3.5 billion worth of the assets, were in the form of a government debt. Guardian Life has also had other assets such as the former Corporate Group Centre, which was valued at $240 million and has been renamed Guardian Life Centre, and the Mutual Life building at Premier Plaza, St. Andrew.
