Feb 2013 Financial News

Sagicor buys the former Hedonism III

Feb 25, 2013

After two years of searching for a buyer, the Development Bank of Jamaica (DBJ) has sold the former Hedonism III hotel to Sagicor Life Jamaica through one of Sagicor's managed real-estate funds.

Richard Byles, president and CEO of Sagicor Life Jamaica, announced the purchase of the former SuperClubs-operated property in Salem, St Ann, on Friday.

The asset was held by a company called Runaway Bay Development Limited (RBDL), which was placed in receivership by the DBJ in 2011 for outstanding debt.

The bank failed at finding an investor under normal bidding procedures, with several tenders - the last of which closed in January 2012 - failing to secure a buyer.

Sagicor took interest in the property at the start of 2013 and concluded the deal pretty quickly, Rohan Miller, Sagicor executive vice-president - investments and chief investment manager, said last Friday.

The acquisition brings to three the number of hotel properties owned and operated by Sagicor Life with a total of 741 rooms now under management.

Sagicor assumed operation of the Jewel Dunn's River property in Mammee Bay, St Ann, in 2010, and last April opened the family all-inclusive Jewel Runaway Bay Resort with the 18-hole championship golf course.

A waterpark is also being designed for construction at the Jewel Runaway Bay property.

According to Miller, the former Hedonism III property is "a relatively new development" built in 1999.

"Its just between our two existing properties and there are synergies we can enjoy from close proximity in terms of management and operational oversight," the Sagicor executive said.

He noted that the waterpark which is being developed will be attached to Jewel Runaway Bay, but will service all three properties in the same way that the golf course does.

Planned investment

Miller did not disclose the sale price or other planned investment in the property, citing issues to be finalised, but a release by the company said the deal will see the 225- room, beachfront hotel, currently being operated as a family resort under the Royal Decameron brand, becoming a property with specific focus on Healthy Lifestyle and Sports.

It is expected that the current managers will continue operations until the end of the summer tourist season.

Byles also indicated that the hotel will undergo refurbishing to both the rooms and main guest areas, and will operate under Sagicor's Jewel Resorts brand as an all-inclusive, adult-only resort starting next winter season.

Currently, the hotel, which sits on beachfront property, offers water slide, tennis and basketball courts, three swimming pools, three bars and four restaurants, a fitness centre, three whirlpool hot tubs and a nightclub.

The hotel was started in 1999 under the Hedonism III brand. The resort was closed in May, 2010, for refurbishing and rebranding. It reopened on October 14, 2010, as SuperFun Beach Resort and Spa, catering to a more conservative market. The Hedonism name was known for adult entertainment, including at least two controversial nude mass weddings.

The property was managed on behalf of its owners by SuperClubs, which owns the Hedonism and SuperFun brands.

RBDL, was placed in receivership early in 2011 by first-ranked creditors to recover a debt of US$20 million.

Its assets include the hotel and an adjoining 3.176-acre property. The company's shareholders are Development Bank of Jamaica with 54.35 per cent interest, and minority partners SuperClubs which holds 15.22 per cent, and Scotia Investments, 30.43 per cent.

DBJ said it has a secured loan of US$3.94 million in Runaway Bay Developments. The loan formed part of the original financing of the hotel through National Commercial Bank and Citizens Bank in 1998 and later assumed by the National Investment Bank of Jamaica in 2004 and, subsequently, by the DBJ in 2006, after the two state agencies merged.

National Investment Bank of Jamaica came into possession of the ordinary shares after the conversion of US$8.9 million of preference shares in a 2000 restructuring exercise. The prefs formed part of the initial financing of the hotel in 1998.


Source:
Avia Collinder, Business Reporter
business@gleanerjm.com
Jamaica Gleaner
Sunday February 24, 2013

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