Friday, April 19, 2024

Hunt for funds


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China’s appetite for investing millions of dollars in Barbados is being tested by the developers of a stalled luxury tourism and residential project.
More than two years after they broke ground at the site of their proposed resort at Foul Bay, St Philip, foreign investors behind the Pure Beach Resort & Spa (PBR) have now turned to the Asian giant in a bid for US$300 million in financing.
And if the deal involving an unnamed “Chinese construction entity” now working in The Bahamas fails to materialize, PBR’s management is banking on financial support from other sources.
They included “a Toronto-based corporate finance firm” (US$47 million in bridge financing plus the option of US$240 million in project financing), “a United States of America/United Kingdom-based private equity firm” (US$150 million in a series of US$20 million disbursements), and “a New York City-based private equity firm to complete the project (US$240 million).
However, based on documented information seen by BARBADOS BUSINESS AUTHORITY, it appears the project’s principals are placing their greatest hopes on getting the Chinese funding.
In an “update” dated November 26, 2013, the “PBR Management Team” said while US$17 million had already been pumped into the project, significantly more funds were needed to get it to the building stage.
Calling the proposed Chinese deal the “first option of total funding”, they said the negotiations entailed accessing US$300 million to provide a “turnkey” solution of financing and construction.
Noting that this type of funding was a senior debt at four per cent interest per annum for a term of ten years, the document said the Barbados project was introduced to the Chinese Ambassador to The Bahamas in July, and that official introduced a senior official in charge of Caribbean projects to PBR “to conduct fact finding and due diligence on the potential partnership between PBR and the subject company”.
“The officer of the subject company explained that their efficiencies can be maximized, as much of the construction resources deployed in The Bahamas will be transferred to Barbados when an agreement is reached on PBR project participation,” the information added, noting that meetings between the parties were held on September 13 and 14 in The Bahamas and again on September 27 and October 3.
As for plan B, which involved securing financing from the Toronto firm, PBC’s management said the bridge financing will allow it “to complete all pre-construction requirements, such as completion of construction [engineering] drawings, grading of the land”.
“Once the construction (engineering) drawings are completed, the actual floor plans for PBR can be provided. This will allow Sotheby’s to begin pre-construction sales of PBR units. In addition to bridge financing, a provision is agreed on an alternative source of project financing for PBR in case the Chinese construction company turnkey solution is delayed,” they said.
“While we are progressing on institutional financing, there has been a significant reinvestment into PBR by existing investors and new participants for soft-cost funds. The soft-cost funds will facilitate pre-construction requirements such as completion of construction drawings and creation of a reserve fund for the purpose of proof of funds required in some financing structures. In all cases, soft-cost funds will prepare us for construction to begin in a timely manner.”
As currently proposed, the St Philip project will be “a 309-unit mixture of one, two, and three-bedroom luxury condo units on 18 acres of land. About 55 of the units are designed to be used as hotel suites”. It is being led by Canadian resident Sang H. Park.


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