Casino resort bids down to two - Salm and partners withdraw
Avia Collinder, Business Reporter
The Ministry of Finance says only two of five prospective casino resort investors remain in the running for Approved Integrated Resort Development (AIRD) status, saying two were disqualified for unpaid bid fees.
A third withdrew its bid.
The Ministry said via email that Amaterra Jamaica Limited and Fiesta Jamaica Limited fell short on the payment of the application fees, but did not name the candidate that pulled out.
However, Richard Salm, who has partnered with American Phillips Reynolds, later confirmed that Casino Royale Jamaica Limited had backed out 'temporarily', but planned to try again.
Salm declined to give a reason for the withdrawal, saying only: "I will re-enter the fray, bigger and better."
All but one of the five candidates had paid the full application fee at the bid opening, as stipulated in the request for proposals. Fiesta, which paid none of the US$150,000 fee, maintains that it did not bid, but had simply sent a proposal to the ministry on how the process for casino licensing could be improved. The Finance Ministry treated it as a proposal, nonetheless.
The disqualifications follow legal advice from the attorney general on whether the bids should be considered for review in cases of late or partial payment of the mandatory bid fee.
Celebration Jamaica Development Limited, which said it paid the fee twice - the first time being 2008; and Harmony Cove Limited, which paid on time, are now the only two still in the running.
Apec Consultants is conducting due diligence on the bids on behalf of the Finance Ministry. The cost of the due diligence is financed from the application fees, the ministry has said.
Three casino licences are up for grabs under legislation passed in 2010 and regulations passed in 2012. Investors must first qualify for AIRD status, which is basically a development order issued by the Ministry of Finance and Planning. The AIRD then qualifies the candidates to apply to the Casino Gaming Commission for a casino licence, but is not a guarantee that a licence will be issued.
Amaterra (AJL) - in which Jamaican developer Keith Russell and American Charles Murphy III of Arkansas are partners - is insisting that it remains a part of the review process. The group's lawyer, Harold Brady, has written to the Finance Ministry saying there is no "legal or factual basis" for disqualification.
Amaterra had initially paid 15 per cent or US$22,500 of the bid fee. It later paid the remaining US$127,500 but insisted that the Finance Ministry not cash the cheque until it had met with the company to clarify some of the casino regulations it believed would impact the project's financing.
Its proposed project spans 850 acress in Duncans, Trelawny, including 3.5 miles of beachfront already approved for development.
The Finance Ministry wrote back to Brady on June 16, saying the Attorney General's Chambers had advised that Amaterra Jamaica's application should be deemed non-responsive to the request for proposal.
"This ministry is therefore obliged to discontinue its review of AJL's proposal. Please note that AJL was deemed as non-responsive as the application fee was not paid as required," the letter stated.
The Ministry said that it returned both cheques to Amaterra.
Brady, in his response to the Ministry, contends that the company had received assurances of a meeting which did not take place.
The lawyer shared correspondence from Financial Secretary Devon Rowe dated February 3, 2014 in which the ministry official acknowledged the meeting request, but instructed Amaterra "to pay the balance of the application fee (US$127,500) by February 28, 2014, failing which the entity's application will not be considered".
Brady replied to that letter on July 11.
"To date our client has received no further communication from the Ministry or from the project coordinator. Accordingly, there is no legal or factual basis on which the Ministry or the Attorney General could determine that our client's application is non-responsive when the Ministry has failed to honour its commitment to schedule a meeting with the coordinator and has not given our client any indication that it now wishes to renege from that position," the attorney wrote.
However, the ministry's email to Wednesday Business sent August 14 regarding the disqualified candidates suggests that it has not been swayed by Brady's arguments.
Celebration Jamaica, led by developer Robert Trotta, has said it plans to invest US$450 million in the first phase of its resort project to develop 1,000 hotel rooms, a 75,000 square-foot Casino & Sports Book complex; bars, restaurants, health club, spa and kid's club; retail space and an artisan village. The resort will be located in Montego Bay.
The other contender, Harmony Cove - owned by Tavistock Group and Harmonisation Limited - will be developed on 2,200 acres of land in Trelawny. The first phase of Harmony Cove will include development of a 1,000-room hotel, a championship golf course and casino facilities. The cost for that phase was last estimated at US$900 million.
The mega-developments fall under the Casino Gaming (Application for Declaration of Approved Integrated Resort Development) Regulations 2012 and the Casino Gaming (Prescribed Games) Regulations 2012.
Under the IRD project, investors are expected to spend a minimum US$1.2 billion in developing casino complexes, featuring at least 2,000 hotel rooms and other facilities. The investor will be eligible to apply for the casino licence after delivering the first 1,000 hotel rooms, and producing a schedule for development of the other 1,000.
The Finance Ministry has previously indicated that the winning bids are expected to be disclosed in September.