Job fears at troubled Newstead

Butterfield Bank has recalled a multi-million dollar loan after the resort fell behind on payments.

The future of more than 100 workers lies in the balance.

Premier Paula Cox appeared to be upbeat in this regard; having spoken to the BIU and also to the receiver, she said “redundancies are not being contemplated”.

And Tourism Minister Patrice Minors was “cautiously optimistic” that a resolution could be found.

Gil Tucker and Rob McMahon of Ernst & Young will act as receivers and managers of Newstead Belmont Hills Golf Resort and Spa until further notice.

The loan figure — a subject of fervent speculation — remains undisclosed, but it is understood resort owner Kevin Petty had been in negotiations with the bank for 18 months in a bid to restructure its financing.

In a statement to the media he admitted news of the receivership was “an awful shock… It is a most unfortunate situation but I am determined to do what I can to protect my employees and keep the resort operating,” he said.

Yesterday Dwayne Gibson, assistant head professional at the Belmont Hills Golf Club, said there were “concerns” among staff about their jobs, but that workers were supportive of Mr. Petty.

“There are going to be concerns, as with any receivership. It can happen tomorrow. Nobody’s job is indefinite. It’s not in Mr. Petty’s hands anymore,” Mr. Gibson said.

“They could say, ‘look, we want to cut such-and-such or we want to cut this person or that person’, but we have to show that this person is needed and what they’re worth.”

He added: “As workers, we have to support Mr. Petty.”

Meanwhile it was “business as usual” at the 18-hole golf course. “Members can still come and play,” Mr. Gibson said.

An employee at the Newstead hotel added staff were continuing in their daily tasks.

“Everyone is just operating normally,” she told us.

Ernst & Young said in a statement: “The receivers do not anticipate any immediate impact on the day-to-day operations of the businesses.

“The Receivers will focus on reorganizing and restructuring operations to facilitate business continuity with a view to a sale of the assets as a going concern.

 “We are currently assessing the situation and cannot comment at this time,” a spokeswoman said.

“The Receivers plan to sell the assets, but are currently exploring various avenues open to them.”

She said Blu and Beau Rivage restaurants would be unaffected as they are operated independently.

Butterfield Bank refused to disclose the loan amount yesterday.

“The bank does not discuss private and confidential customer information,” a spokesman said.

“The bank took this action (receivership) following default on payments of principal and interest owed by the (Newstead Belmont Hills) companies on loans advanced by Butterfield.

“The decision was not taken lightly, but Butterfield feels it is appropriate at this juncture, and the decision to place the assets into receivership is in the best interests of the bank’s shareholders and all other stakeholders.”

The Bermuda Industrial Union (BIU) was unavailable for comment yesterday.

But Premier Paula Cox said: “Yesterday (Monday) I spoke to the BIU president (Chris Furbert) and we had a constructive and frank exchange.

“The paramount concern is for the employees, and for the hotel to be in a position to continue as a going concern.  From the discussions with the receiver, that is the intent and I was assured that redundancies are not being contemplated.”

Tourism Minister Patrice Minors said: “This latest development regarding the Newstead property is regrettable.  However despite its challenges, this does not diminish our confidence in Bermuda’s strength and appeal as a premier visitor destination.

“I want to assure residents that we are monitoring the developments with the property very closely and are cautiously optimistic that some form of resolution can be reached which will benefit all concerned.”

But Cole Simons, Shadow Tourism Minister, called for direct action to assist all island hoteliers.

“Tourism is not far from its last breath,” he said.

“A number of hoteliers have told me this has been their worst year yet.

“To me, this announcement (Newstead Belmont Hills) is a wake-up call to Government, that they need to provide more support, so we can be as competitive as jurisdictions to the south.”

He said some Caribbean tourism numbers were “improving”, but that Bermuda was “not there yet”.

“Hoteliers need all the support they can get from the community, the financial sector and from Government. Government sets the policy and so should provide a bit of (tax) relief at this time.”

When Newstead Belmont Hills opened in 2008 — the island’s first large-scale resort for 30 years — Premier and Tourism Minister Ewart Brown described it as “the start of the platinum period for tourism”.

Those in the industry said the receivership this week was unexpected.

John Harvey, Bermuda Hotel Association CEO, said: “These types of developments are always concerning and yes, it’s a bit of a shock.

“Hopefully a new prospective buyer will be identified and it will be resolved quickly.”

He remains confident investors will return to Bermuda.

Mr. Harvey said prospective developers were “savvy enough” to know that once the U.S. economy recovers, the island’s tourism product will follow.

“Right now it’s a tough hill to climb because we have no control over it, but there is light at the end of the tunnel,” he said.