Perhaps they will pass each other by at the revolving door of Caribbean tourism investment: Neal & Massy exiting from its BS&T-owned Almond Resorts holdings and the NIS entering with its Four Seasons’ money.
There might be a cautionary tale here if the Government was willing to listen, but instead it doubled down on its already hefty US$60 million loan guarantee to the Four Seasons project by, shall we say, letting it be known that it supported the NIS investment of around US$140 million.
The confirmation by the Government, which was endorsed by the Central Bank (why am I not surprised?) last week, that the NIS would pump a few hundred million in the submerged Four Seasons was widely expected, but there was no rejoicing.
Everyone knows this is a desperate effort by the Government to get some major construction project going because it is facing the electorate in less than a year with almost nothing to show for its five years in office.
And while it has placed all responsibility for our woeful economic affairs on the bad, bad world outside, Prime Minister Freundel Stuart, Minister of Finance Chris Sinckler and the rest of the ponderers and ponderous in the administration know they must make something happen, somewhere in the economy.
For them, the only thing they could come up with was an already failed project which is likely to remain in fail mode no matter how many more millions are pumped in to it. Like the GEMS of Arthurian legend.
Still, there’s no use crying over spilt milk, so let us wish Four Seasons well. Pause to swallow hard.
Now onto the Almond debacle. You know, say what you like about the Trinis taking over our economy (which they have), but at least they tell you what is going on in their public companies (notice I did not say “insurance” companies).
Take the latest Neal & Massy annual report.
This thing is 150 pages long and the first 50 contain management reports. Not the generic kind you usually find from Barbadian public companies, but reports that actually tell you pretty fairly how things have been for the companies in the group, and that includes the bad news.
Thank you, Neal & Massy. I think more highly of you for telling me things like how much money you lost in Almond investments and what you are doing to stop the flow of red ink. It is painful to read, even in its bald financial form (OK, these folks are not Robert Ludlum), but I salute your clarity, even if the news invites me or others to offer criticism of you or the companies you bought. That is what comes with the territory of being a public company.
Put simply, Almond hotels here and in St Lucia have all lost money for the past three years and Neal & Massy felt it could not bear them any longer so it took a big hit. A big one. It wrote off over two-thirds of its profit (TT$270 million) for the year which ended on September 30, 2011, as an “impairment loss” and set the Almond companies aside from its ongoing entities while preparing them for sale.
The goal is to at least pay off the outstanding liabilities on these companies of close to half a billion TT dollars. Anything on top of that will probably call for the champagne to be brought up from the cellar, I guess, as the assets for Almond do exceed the liabilities by around TT$140 million.
Goddard Enterprises Ltd (GEL)?CEO Martin Pritchard reported last week that GEL had also written off its Almond investments, but I will say more on that after I have read its annual report.
According to N&M, its Almond hotel investments included an effective ownership in Almond Resorts Incorporated (ARI) of 52 per cent, Almond Casuarina of 49.9 per cent and Lazy Lagoon of 44.3 per cent. N&M says it hopes it can get the Almond albatross off its back during this fiscal year, which means by September 30. Perhaps the buyer will also relieve GEL simultaneously.
Which brings me to this question: why can’t big business in the Caribbean run hotels? Why would Neal & Massy move to reduce its “direct exposure” to the tourist industry when it has struggled with entities like DaCosta Mannings for the same period of time? Because, say I, one is not their culture and the other one is.
One is foreign soil and the other is home turf.
This is not to cast aspersions on anyone or any company, but just to note that the hotel business is not one in which Caribbean investment or holding companies seem to excel.
Basic manufacturing, food and beverage wholesale, retail and distribution, some light industry and energy-related services, now you’re talking. But hotels, telecoms, airlines, not to mention the increasingly hi-tech mobile service companies with their 3G this and 4G that – leave it to others.
(Bizzy Williams and Butch Stewart not included in the above.)
Will it take us another generation (by which time it will probably be too late) to nurture and develop the home-grown knowledge, confidence and talent to take on these industries? From where will the capital come even if the people were ready then?
Why does Ireland produce a Dennis O’Brien and not Barbados? Well, me wee laddie, that is probably a long story, but remember we had written Ireland off some years ago. Now they are industry leaders in many fields, taking on the world.
Will Caribbean business only be good at what they already do so well, or will they one day progress to be good at the emerging businesses that we need to embrace in order to survive in the long run?
And how is it that we can’t be successful investors in the one industry which most of the region’s countries need for their very survival?
