Premier: GLF can still be involved
The Cayman Islands
government last week terminated an exclusive negotiating arrangement with a
Florida-based construction company brought in to design and build a port
berthing facility for the George
The berthing facility
would allow a certain number of cruise ships direct access to an expanded dock
so their passengers would not have to use smaller tender boats to ferry from the
cruise ship to the harbour.
The framework agreement,
signed between government and GLF Construction Corporation in December, was
effective for a four-month period ending on 14 April, 2011. It allowed GLF and
the government to negotiate exclusively the terms of the berthing project.
Two days before the
agreement expired, GLF President Francesco Senis sent a letter to Cayman Islands
Premier McKeeva Bush, providing an update on the project.
According to the
correspondence obtained by the Caymanian Compass, GLF has developed a “complete
master plan” for port expansion. Mr. Senis wrote that both Carnival Cruise Lines
and Royal Caribbean had favourably reviewed the plan.
The 12 April letter also
indicated that significant steps had been taken toward project financing. The
company said a commitment letter for the full project financing had been
received from Citibank as well as some private equity firms, and that it was
awaiting final project plan approval from government prior to executing any
deals for the finance.
“Several banks and
private equity funds have submitted expression of interest for the project under
different risk schemes; financing with or without preferential berthing
agreements,” Mr. Senis wrote. “Also, the option of a phased development has been
The letter stated there
have been talks between GLF and the cruise lines on arrangement of a
preferential berthing agreement – which essentially means first dibs on dock
space – in exchange for a long-term commitment to bring visitors to Cayman. No
agreement was made as of 12 April on “penalty fees” in case passenger numbers
fell below expectations, Mr. Senis noted.
“If, however, the cruise
lines are unwilling to enter into preferential berthing agreements, GLF has
secured alternative financing options for the project without any passenger
volume guarantees,” Mr. Senis wrote. “Once all the agreements are completed, GLF
will commence partial mobilization of all the necessary resources within six
Two days later, a letter
was sent by Premier Bush to Mr. Senis indicating that the four-month framework
agreement with GLF had been terminated.
“Up to and including your
12 April, 2011 letter, GLF has not demonstrated any positive proof that it is
able to finance the port expansion project at the George Town port,” Mr. Bush’s letter read. “You
stated that GLF Construction Corporation ‘has secured the commitment letter for
the full project financing from Citibank as well as from the private equity
firms’. However, in our view, this does not present proof of access to the
necessary financing sufficient to warrant that the definitive agreement may be
Mr. Bush indicated in his
letter that government appreciated the time and effort spent on the project by
GLF and that it was still willing to work with the company, which is a
subsidiary of Rome-based Grandi Lavori Incosit SpA, and that the firm could
still participate in the port development.
“But you will no longer
have exclusivity on the project,” Mr. Bush’s letter stated. “Should another
company come through with the required design and financing, we will naturally
be obliged in the interests of the public, to work with them.”
The Premier’s letter left
the local company handling the upland construction part of the berthing project
“We’re in shock,” said
Howard Finlason of Royal Construction. “We have done everything we were to do in
the timeframe it was asked for.
“We believe the framework
agreement we signed is still valid and [is[ still legally binding on all
parties. There has been a letter, but we do not view it as a legal termination
Premier Bush released a brief statement about the framework agreement around mid-day Thursday.
“It was in the best interest of the
country that we give ourselves other options by ending the exclusivity clause with GLF as provided for in the
Framework Agreement of 14 December 2010,” Mr. Bush’s statement read.
“The framework agreement between GLF and the
Cayman Islands government and the port Authority of the Cayman Islands entitled
us to invoke the non-exclusive clause within the framework agreement. This route was taken in the best interest of
the country to ensure that this project moves ahead successfully in a much more
timely manner. The cruise ship berthing facility is vital to the future of our
tourism industry. We must therefore move forward with high confidence that this
project will get underway with the least delay possible.
“When a decision is made on the
awarding of a contract for the port expansion I will make a make statement
giving a full explanation to the country.”