Latest Purchaser Update from Bacolet Bay

Bacolet Bay purchasers received a rare update from the BDF yesterday, though as usual it didn’t contain anything new and merely parroted the same “cheque’s in the post” message they’ve been repeating since going into breach of contract in 2014. The only new item is the mooted formation of a purchasers’ committee. Here it is:

Dear Client
 
We are writing to provide an update on the implementation of the plan to deliver the resort and enable Bacolet Development Finance Limited (the “Company”)  to meet its commitments to its purchasers and other stakeholders.
 
As previously advised, it is vital that the Company is financing works on site before the launch of its sales under Grenada’s Citizenship by Investment program (“CBI”).  There are several reasons why the sales launch must coincide with the commencement of works on site. 
 
The delivery of the resort is being phased through smaller more manageable sections of the site. The works being undertaken through investor funding mean that all future sales being made under the CBI program will form part of a financially deliverable section of the resort. The surplus generated from this part of the resort will provide further capital towards the funding of the next section of the resort. In this manner a very measured approach is being taken to progressing the project. Each section of the resort being delivered enables the Company to fulfil obligations to purchasers whilst also maintaining a sensible approach to risk management.
 
In order to implement this plan the following key elements need to be in place:
 

1)      Completion of fundraising from investors

2)      Commencement of works on site

3)      Sales under the CBI program

4)      Continued support of purchasers and investors

 
Further commentary is provided below in relation to each of these points.
 

1)      Completion of fundraising from investors

 
This process is nearly complete, with a view to works commencing on site in the new year.  The funds are being paid by capital investors who injected capital into the project in 2008.  These investors have not received any return of or on their capital invested.  They are financing build activity in order to enable the project to move forward.  A number of existing purchasers have also said that they will finance the build of their units if the project is progressing.   The commitment of those individuals will benefit all existing purchasers in the project. A meeting of the capital investors was held in October with a view to bringing this round of fundraising to a conclusion.  That has led to positive momentum with only an approximate 15% of the required capital raising still to be completed. We expect that this will be addressed before the Christmas break.
 

2)      Commencement of works on site

 
The project is construction ready and the Company has an existing relationship with an on island contractor who is able to commence works in January. The contractor has previously managed the construction of the One and Two Bed Villa units and is therefore already familiar with the required works and quickly able to mobilise. We have held discussions and agreed that a January start is achievable.
 

3)      Sales under the CBI program  

 
The financial commitment described above and progress of works will also enable the Company to progress sales under CBI and seek further capital contribution from investors and/or finance.  On 10th September 2018 the Grenadian Government announced that CBI investors can (after a period of time to be confirmed) re-sell any property that they buy under the program to another CBI investor.  This provides an “exit” route for CBI investors that brings the Grenada CBI product in line with other Caribbean countries and is an important enhancement of Grenada’s CBI product.  CBI sales will enable construction works on site.  Monies paid by CBI investors are paid into escrow account and drawn down against the delivery of units and infrastructure.  This activity will in turn put the Company in a position to deliver units to existing purchasers who wish to complete their purchase or an exit for those who no longer wish to do so.
 
A director of the Company is regularly visiting Asia working with agents who promote CBI sales. A network has already been established through which the CBI sales launch can be promoted following steps 1 and 2 described above. There remains a good deal of work to be undertaken to continue to build on this process however the starting position is good and the relevant materials have been prepared.
 

4)      Continued support of purchasers and investors

 
We understand that the delay is frustrating, but we will notify all purchasers when the works being financed by individual investors and purchasers have been commenced and therefore CBI sales have been launched.
 
In order to aid communication and to seek to ensure that purchasers’ interests are being monitored and represented as a whole, we propose to invite a committee of purchasers to have direct access to the Directors of the Company with the ability to see first hand the progress of implementing the plan described.  We will revert on this issue shortly.
 
The position remains (since January 2008) that the Company owns the project site subject to a first charge in favour of the capital investors.  The present intention of the capital investors is to continue to support the project.  At least one purchaser has indicated an intention to publicise the delayed status of the project in a negative press and social media campaign.  That will put the Company’s CBI approval at risk and jeopardise the ability to make future sales, which remain essential elements of the route to delivery to the existing purchasers.
 
We genuinely recognise that the prolonged period of time for delivery of the project is frustrating, however all other options that we have considered would not have resulted in a positive outcome for purchasers. During January we should be in a position to a) show tangible progress in the implementation of the plan through construction works, b) have taken steps to improve communications with purchasers through the formation of a committee.
 
If you would like to talk to a Director, please e-mail hbain@Bacoletbay.com  to arrange a telephone appointment.
 
The Directors
Bacolet Development Finance Limited
 
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