Former Hedonism III hotel up for sale
Published:Friday | March 11, 2011 | 12:00 AM
Avia Collinder, Business Writer
Runaway Bay Developments, the company that owns SuperFun Beach Resort and Spa, the former Hedonism III, has been placed in receivership by its first-ranked creditors of four banks to recover a debt of US$20 million.
John Lee of Pricewaterhouse-Coopers (PwC), who was named the receiver and manager of RBDL in February, began marketing the property days later.
The hotel is managed by SuperClubs under an operating lease. PwC said Thursday that the contract would remain in effect until the property is sold.
The sale comes as SuperClubs announced that it was cutting ties with another government-owned property, Breezes Rio Bueno.
The resort group said it would end its management of Rio Bueno on April 30 after failed negotiations with the National Insurance Fund (NIF).
"Where an operation in Jamaica or elsewhere is no longer viable, we cannot continue to subsidise them in this very competitive marketplace," said Zein Nakash, SuperClubs vice-president of marketing and environmental affairs.
SuperClubs Chairman John Issa said the closure came after a "strenuous two-year effort to arrive at a mutually satisfactory lease arrangement with the owners", and that the termination of the arrangement would cost 300 jobs.
Audrey Deer Williams, senior director for investments at the NIF, said the fund was making new arrangements for the resort.
"We are currently in sensitive negotiations and can't comment further," she said.
RBDL's first-ranked secured lenders are Caribbean DevelopmentBank, PanCaribbean and Development Bank of Jamaica (DBJ).
DBJ said Lee would be advertising for sale the 225-room hotel, which sits on 10 acres of beachfront property and an adjoining three acres of land. The hotel and its adjoining lands are RBDL's sole assets.
However, the bank declined to put a valuation on the resort saying it would prejudice potential bids.
The development bank says it holds a controlling majority of 54.35 per cent in RBDL; Scotia DBG Investments owns 30.43 per cent; and SuperClubs, through Village Resorts, owns 15.22 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.
NIBJ 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.
Nakash says that SuperClubs would be interested in continuing the operational lease for the Runaway Bay property after sale. Asked if SuperClubs was making an offer for control of RBDL, she said, "No comment."
The hotel was started in 1999 under the Hedonism III brand, with Issa agreeing to invest and run the property with a clause that gave him the right to match any offer for the remaining stake.
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 SuperFun, Hedonism and Breezes brands are owned by SuperClubs.