Posted by: Editor on Mar 21, 2007 – 03:11 PM
newsandinfo  A boutique Swiss/UK investment house has acquired the majority shareholding in downtown Nassau’s British Colonial Hilton, and has made an “investment commitment of over $30 million” to upgrade the resort currently acting as the ‘anchor’ for Bay Street.

Adurion Investment Management, a subsidiary of Audrion KG, a company founded by a Swiss software entrepreneur, has purchased the major controlling stake in the hotel’s holding company, the British Colonial Development Company, from the Canadian Commercial Workers Industry Pension Plan (CCWIPP) in a move set to revitalize both the resort and surrounding areas of downtown Nassau.

CCWIPP will retain a minority stake in the British Colonial Hilton, participate in any upside and recoup its original principal investment through the Adurion transaction, while the new investor will bring extra capital plus financing and management expertise, to take the resort forward and improve profitability”.

A CCWIPP spokesman told The Tribune that Adurion was making a multi-million dollar investment in the British Colonial Development Company, which also owns the Centre of Commerce and Fort Nassau Centre, in addition to the hotel.

The spokesperson described the Adurion involvement as “an investment commitment of over $30 million”, with the company preparing to lead a major refurbishment and renovation of the British Colonial Hilton that will begin in August-September 2007.

“They plan to bring the British Colonial Hilton up to speed and up to date, investing about $15 million in refurbishing the inside and outside,” the spokesman said.

“We’re working with and cooperating with the Bay Street Improvement group and our retail tenants. With the closing of the Straw Market, and opening of the new one, that’s one of the elements that will improve the hotel,”

The British Colonial Hilton deal represents a major boost both for the hotel and downtown Bay Street, especially as it will tie-in to the downtown redevelopment project and further enhance the area’s ‘anchor property’.

Adurion’s planned refurbishment is also likely to rub off on the surrounding area, and will provide a timely boost for Prime Minister Perry Christie and his government, both for their long-term plans and general election hopes.

The Adurion involvement also holds out hope of attracting further additional investment to the area, with six acres of land to the west of the British Colonial Hilton set for a major beachfront development.

The Government has been locked in intensive negotiations with Island Global Yachting (IGY), a New York-based marina and boutique resort developer, for a number of years and is understood to have reached an agreement in principle for that project.

The IGY project has been projected to create “very substantial employment”, generating 700 full-time jobs and another 400 indirect jobs for Bahamians. Some 200-250 jobs were projected for the construction phase, with the project having a total economic impact of $222.8 million over a 20-year period.

The CCWIPP spokesman yesterday said talks between IGY, the British Colonial Development Company and the Government were continuing. He said: “We’re going back and forth negotiating, We hope it materializes, and there are some issues we are negotiating. I think we will know in the next week to 10 days. We’re optimistic, and hope it can all be put together.”

The CCWIPP Spokesman said the Adurion investment would help to justify the initial investment made by Ron Kelly’s RHK Capital, heavily funded by the Canadian pension fund, in redeveloping and renovating the British Colonial Hilton “at a time when it was closed down and out. They had confidence in Nassau, and invested quite a lot of money. Despite the problems, everything came out rosy.” The CCWIPP spokesman said.

Apart from recovering its principal investment, CCWIPP was also gaining the support and expertise of a $1 billion operation. The CCWIPP spokesman described the operation as “a true joint venture partnership” with Adurion. While the latter has the majority of shares, and will appoint three directors to the British Colonial Development Company’s Board CCWIPP nominating the other two, the shareholders agreement provides for both sides to have equal voting power.

“We’re in a very comfortable position, and have all the confidence in the world in the skills and talents of Adurion,” the CCWIPP spokesman said. “We’re fully comfortable with that, and fully protected on the release of funds to the pension fund and its members.”

The Hilton will remain in place as the operating partner, and the 291-room resort, which employs some 300 staff and covers 107,000 square feet, is expected to generate an improved financial performance as a result of the forthcoming upgrade.

Peter Webber, the British Colonial’s current general manager, was specially selected because of his expertise in “operating first class hotels during major renovations”. These properties included the Hilton at Heathrow Airport in London, where 100 percent occupancies were maintained, the Hilton in Curaco, and the $40 million renovation at the Drake Hotel in Chicago.

Further employment opportunities may result as the upgrade enhances the British Colonial’s star-rating level and service levels, something that usually requires more employees per room.

The CCWIPP spokesman said of the investment by Adurion: “I think it’s a tribute to Nassau and the Government there, and all of the things accomplished in the Bahamas over the past few years, which have been very positive for the investment community.”

The need for Adurion’s investment, time and expertise was exposed by a confidential report to the Government on the British Colonial Hilton that the Tribune obtained in 2003. It showed that between the 1999 reopening and December 31, 2002, the hotel had run up an accumulated deficit of $34 million, with losses of $6.7 million and $4 million incurred in the two years leading up to that date.

The report said the British Colonial Hilton had been “unable to generate any return on investment since its inception”, with the resort’s debts standing at $105 million – some $31 million in bank debt and $74 million advanced by CCWIPP.

The report said that for the Hilton to generate a return for its owners, an average daily room rate (ADR) of $351 was required in 2003, compared to the $129.39 being achieved. However, Gerardo Barrios, vice-president of operations and general manager for the British Colonial Development Company, said earlier this year that 2006 had been a “record year” for occupancies and room rates, with ADRs around $173-$174. The Centre of Commerce was also 100 percent occupied.

The Adurion group was founded by Swiss entrepreneur Daniel Aegerter, after the 2000 merger between his software company, Tradex Technologies Ariba Inc. It has since been involved in real estate and corporate investments through Adurion JG and Armada Investments, two affiliates. Adurion Capital Ltd, the London-based firm, advised on the British Colonial deal, made through Adurion Investment Management’s Bahamian subsidiary, Fort Nassau Investments.

Adurion provides asset protection, administration, investment management, reporting, controlling and consolidation services.

As a mid-market investment house or private equity firm, it looks for investments that are too small to attract larger private equity players, but are too large for regional funds. It targets opportunities where it can preserve its principal, avoids start-ups and early stage companies, and can take a hands-on approach in management.

Adurion has two real estate projects – one commercial, one residential – in Germany and has invested in TAG Company, a provider of anti-shoplifting solutions to retailers, and UK-based ITI Energy.

Source: The Tribune