
City Hall, Hamilton Bermuda
Bridge financiers for a $300 million hotel project in Bermuda’s capital have filed suits against the Corporation of Hamilton and developers Par-la-Ville Hotels and Residences Ltd.
The actions are being brought by Mexico Infrastructure Finance which provided a Corporation of Hamilton backed $18 million loan to the developers.
PLV Hotels principal Michael MacLean, however, is confident that the MIF loan will be repaid by the end of the month and the court action will be unnecessary.
“I wouldn’t have made the investment. I wouldn’t risk that sort of money if I wasn’t confident,” said MacLean.
Last year, the Corporation of Hamilton provided the loan guaranty using its property as collateral – an arrangement made possible by recent amendments to the Municipalities Act.
The funds were supposed to be repaid from the proceeds of further financing which had been contingent on the bridge loan.
But the senior financiers have not come through on schedule with further financing and have committed to do so by the end of the month, according to MacLean.
The delay caused the developers to default on repayment which prompted MIF’s suits.
MacLean said he fully agreed that the loan has passed its maturity date without repayment – a situation caused by the fact that the funds were actually received two months into the term of the loan.
PLV Hotels and MIF agreed the $18 million bridge loan in July last year. The due date for repayment was the end of December and the funds were placed in escrow.
Meanwhile, City Hall councillors demanding the resignation of Mayor Graeme Outerbridge claim that he and Corporation Secretary Ed Benevides consented to the release of the funds from escrow without the consent of the full council, thereby creating unnecessary financial exposure for the Corporation.
“At issue here is we got informed by our lawyers that the Secretary and the Mayor signed a document releasing funds from an escrow account that was not supposed to be released,” Alderman Carlton Simmons told us last night.
“That has put the Corporation in a position as the guarantor for an $18 million loan – that we may have to pay $18 million as opposed to $3 million. And they met in England with a broker and they did not inform us as the council or they didn’t take legal representation.”
Simmons added that the Mayor refused to place the matter on the agenda for discussion by the council.
Mayor Outerbridge suspended all Corporation of Hamilton meetings following a confrontation on Friday afternoon with a handful of councillors including his deputy Donal Smith and Carlton Simmons, saying the code of ethics and conduct had been breached.
While Smith believes that the Mayor was attempting to unilaterally drop a Council-authorised lawsuit against the Government, Simmons claimed the Mayor was seeking to avoid questioning over the PLV deal.
“In an attempt to avoid being questioned about these very serious allegations that have already been put to us by our lawyers he has taken the tactic of suspending these meetings until further notice.”
Mayor Outerbridge declined to make any further comments last night but told the daily newspaper that he had done nothing outside his remit.
Benevides sought to clarify what happened at the meeting in London.
“I was attending a municipal conference in Bristol in October,” he said in an email. “I can provide you with the attendance certificate if needed.
“On my way back to the island I was asked to sit in on a meeting where senior financing for the PLV project was discussed. There was no agreements or contracts presented only potential funding vehicles explained.”
MacLean confirmed that the funds were in fact released from escrow as part of an agreed financing process.
“If you don’t release it from escrow, the Corporation would have paid all the interest and fees for nothing,” the developer said, adding that the bridge loan funds were always destined for the senior lender of the $300 million project.
“The money went toward the construction finance. That’s where its supposed to go.”
He added that the dispute between the members of the City Council about the process for releasing the funds was a matter for City Hall.
“Par-la-Ville made its request and the request was approved,” he continued.
“I made a request and said we were satisfied and we were ready to release. We sent our release request to the escrow agent and they [City Hall] had to do the same. I wasn’t capable of releasing on their end or influencing their decision to release.”
Asked if he would be making an announcement about the start of construction at the end of the month, he said: “I’m not making no announcement. When I’m ready I will take an excavator down there and start cutting the hill down. Maybe one of the Corporation members or the Government can do some PR.”
Plans to build a luxury hotel on the City-owned Par-la-Ville car park have been in the works for about a decade.
This article belongs to Politica ! The original article can be found here: Developer confident as financiers file lawsuits over hotel deal
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