James Glasgow and David Lattimer, executives of US-based Five Mile Capital Partners held a press meeting last Wednesday (21) to answer statements made in the Legislative Assembly by Cayman Islands Premier, Hon. McKeeva Bush.

Bush last week claimed the auction price was far too low as there was a US$468M valuation executed in 2007 carried out by Quantity/Valuation Property Surveyors, BCQS.

However, Glasgow claimed another local firm, Charterland, had valued the property recently at US$177.5M and that was the reserve price. The government’s Valuation and Estates Office had agreed the valuation in writing.

There was only one bidder, RC Cayman, although it was confirmed at the press meeting there was one other person at the auction. There is strong speculation that the person was Dart. Whoever it was didn’t bid because, according to the executives, he said the opening bid (that matched the reserve) was too high.

I can only wonder why he was there, then? Perhaps the mystery man didn’t know what “reserve” meant?

Glasgow said after marketing the planned sale across the globe to well over 1,100 investors, only three groups showed an interest and in the end there was only this one other bidder, who didn’t actually bid.

Glasgow also made the point that, “Were the hotel worth anything like $400 million, we would have had hundreds of investors wanting to bid given a reserve price of $177.8million but no one else wanted to bid.”

Judging on all the above the government’s case of trying to obtain stamp duty on a valuation executed in 2007 over 2½ times times the price actually paid at auction looks slim.

The only thing that looks a little suspect to those of us who have a twitching nose is that the company that owns the Ritz- Carlton, RC Cayman is owned by Five Miles Capital. They had also originally set a much higher reserve price.

Mr. Latimer warned that any attempt by the government to collect monies above $177.8M would be met with litigation and could be so crippling the hotel could close.

Now that was a nice shot across the bows.

With government estimated to receive over US$12M in stamp duty on the sale, major plans for the resort, the executives claimed government would do very well from the sale as it is.

The main long term goal for the hotel was to gradually increase the value of it through an injection of money from institutional investments such as universities endowments and pension funds, to recover the current loss between the value of the debt and the current value of the resort and beyond, so that when the hotel is sold in the future it might well be worth $400 million the executives explained.

The two men reiterated RC Cayman did not owe the $6M duty that Mr. Ryan owed. This was in reference to the deferred duty payments that government alleged receivership companies formerly controlled by Ritz developer Michael Ryan who originally owned the Ritz owed it.

They also said Government did not respond to any of their proposals prior to the Ritz sale for concessions in order to pay the $6M despite “Herculean efforts” on their part. In responding to Bush’s charge of the outrageous concessions they had asked for the executives said the list of concessions that were requested were never set in stone and open for negotiations. Negotiations that government declined to respond to let alone even discuss.

Much as I hate to say it, “why aren’t I surprised?

Of course, it would have been so different if Michael Ryan had still been in charge or if Mr. Dart had acquired it.  Just look how the premier went to such huge lengths to get Ryan to pay the $6M he owed? What’s that? He didn’t? Not that I am aware of he did.

But if Dart had bought the Ritz, given the existing deal between government, the NRA and Dart as well as the pending mega deal that government is slated to sign very soon, wouldn’t the public purse have had to give up 50% of all taxes at that resort over the next ten years?

That, though, would have probably been OK.

Glasgow said at the press meeting, RC Cayman was not looking for anything like that, merely concessions on import duty, a chance to buy the land, a break on work permits and other benefits that could all have been negotiated to the point where both sides were happy.

Happy doesn’t seem to be a word in anyone’s vocabulary in government at the moment and indeed what has happened to that glitz that was always part of the Ritz?