The new owners of The Ritz-Carlton, Grand Cayman, visited Grand Cayman and met with members of the media Wednesday morning.
James Glasgow and David Lattimer of US-based Five Mile Capital Partners reiterated the company’s position that it does not owe government $6 million in deferred duty payments, and that the US$177.5 million auction price of the resort property was based on an impartial valuation agreed to by government.
“We do not owe the duty that Mr. Ryan owes,” said Mr. Glasgow, referring to the deferred duty payments that government alleged it was owed by receivership companies formerly controlled by Ritz developer Mike Ryan.
Private equity firm Five Mile is the owner of local company RC Cayman Holdings, which purchased the Ritz at auction 31 October.
Mr. Glasgow and Mr. Lattimer said local firm Chartlerland pegged the value of the property at US$177.5 million, and that value was OK’d in writing by the government’s Valuation and Estates Office.
Last week in Legislative Assembly, Premier McKeeva Bush said the auction price was far lower than the US$468 million value assigned by a valuer in 2007, apparently referring to a January 2007 valuation performed by property consulting firm BCQS.
Saying that 2007 valuation may have been used to obtain the US$232 million in credit from Credit Suisse that was eventually acquired by Five Mile, Mr. Lattimer said, “At some point, someone believed that was the value.”
However, in today’s situation, Mr. Lattimer said an attempt by the government to collect stamp duty on the Ritz sale based on a US$468 million value, rather than the US$177.5 million price, could lead to litigation and might cripple the company’s plans for the Ritz.
“The hotel might shut down,” he said.
The Ritz owners later sought to clarify that remark in the following statement sent to the Caymanian Compass on Thursday.
“Five Mile Capital LLC have no intention of shutting the Ritz-Carlton Grand Cayman down. Nor does the company want to imply in any way that this is the case.
“To clarify, Five Mile’s objective is to direct capital investment into the asset so that its current Five Diamond rating can be maintained. Five Mile has been advised that the loss of the Five Diamond rating would be damaging to the Resort and its overall value and global standing. Without the necessary capital investment the Five Diamond rating would be in jeopardy.
“Five Mile is prepared to pay the requisite stamp duty based on the current appraised value of the hotel. It fears, however, that a tax based on a 2007 valuation, premised on projected revenues that never occurred, will negate the ability to make the necessary capital improvements to preserve the Five Diamond rating.”*
On island from Monday to Wednesday, Mr. Glasgow and Mr. Lattimer visited with the Ritz management company, toured Grand Cayman by helicopter and met with the press at the office of the firm’s legal representatives Conyers, Dill and Pearman. They also planned to meet with Governor Duncan Taylor and perhaps Deputy Governor Franz Manderson – but not with the premier or members of his government.
For more on this story, please see Friday’s edition of the Caymanian Compass.