Neal and Massy slammed over handling of Almond Village

By Pat Hoyos

(Barbados Nation) Neal & Massy Holdings LIMITED’S ongoing disastrous handling of its exit strategy from loss-making Almond Resorts Inc. raises questions in my mind as to why stakeholders and the general public were not informed, as long as a year ago, when the decision to divest its holdings in Almond Resorts was actually taken.

Instead, we have had the spectacle of the Neal & Massy chief executive officer (CEO) Gervase Warner turn up in Barbados to drop a “bombshell” on the poor workers of Almond Beach Village. They will be going home at monthend because no deal has yet been inked with a new buyer for the property, and there was no more money in the kitty to keep the place ticking over.

Is that really how Neal & Massy does business, when it knew it would be trying to sell off Almond up to a year ago?

Mr Warner, in his CEO report for the 2010 fiscal year, which would have been published early in 2011 (last year), told shareholders that while major efforts had been made to turn around loss-making subsidiaries, there had been “increased operational losses in the ARI (Almond Resorts Inc.) hotels”. As a result, “the ARI board will explore all options for restructuring and turning around the performance of the hotel group . . .”.

That exploration apparently turned up nothing because somewhere around the same time that the 2010 annual report appeared in print, the decision was taken to get out of Almond.

We learn this, ironically, not from Neal & Massy, but from Goddard Enterprises Ltd (GEL).

Noting the continuing losses of the Almond properties, GEL’s chief financial officer Natasha Small, writing in the 2011 annual report published early this year, told GEL shareholders that “a decision to divest was taken by the joint venture partners at the beginning of 2011 and BroadSpan Capital LLC of the United States of America was retained to seek out potential buyers. This process of divestment is ongoing”.

Full-scale battle

Getting control of Almond Resorts Inc. was not the reason why Neal & Massy Holdings, having failed in its initial quest to merge with Barbados Shipping & Trading Co. Ltd (BS&T) in May 2007, bared its war chest and went into a full-scale battle with AMCL Holdings Inc. in a takeover bid, which Neal & Massy eventually won.

The goal was to achieve ever larger growth through acquisition. But as a sidebar, the takeover of BS&T gave Neal & Massy a 52 per cent controlling interest in Almond.

Neal & Massy should therefore have confessed, as soon as it found itself with a majority stake in ARI, that it was really an old-fashioned Caribbean conglomerate with no experience whatsoever in tourism and that it would seek an international partner to either joint venture with it and Goddard Enterprises (which had teamed up with BS&T before the takeover to acquire Casuarina in Barbados and Morgan Bay in St Lucia) in turning around Almond or even selling it off entirely.

Neal & Massy CEO Warner told THE NATION in a story appearing last Friday that Almond needed upwards of $40 million to refurbish the sprawling 31-acre Beach Village. But, he said, “not having that hotel experience . . . for us to see a further path in tourism did not get past our board of directors”.

And when was that decision taken? Last month? Late last year? No, my friends, 12 long months ago, according to the GEL annual report.

The workers at Almond Beach Village and their families will suffer the consequences of Neal & Massy’s failure to turn around ARI. Barbados’ economy, already in dire straits, will take another hit, ironically from the company it facilitated and encouraged every step of the way in its quest to own BS&T. But Neal & Massy sees a rosy future for itself.

Or so it has told its shareholders.

‘Underperforming’ company In its 2011 annual report, Paula Rajkumarsingh, executive vice-president and chief financial officer, dismissed Almond as one of “a few underperforming companies” which “have negatively impacted the group’s results in the last two years, with total losses to shareholders of TT$500 million”.

The Neal & Massy board therefore decided, she wrote, “to reduce our direct exposure to this industry”. The investments in Almond Resorts were “restructured”, resulting in “an impairment loss to our shareholders of TT$270 million”. However, putting Almond into the Discontinued Operations category and making it available for sale “has strengthened our gearing ratio, net current asset position and our current ratio”.

So, thankfully, the Trinidad and Tobago group, which five years ago more than doubled its annual interest payments in order to swallow BS&T, and along the way acquired an outside child from an alien culture (tourism) that it did not know how to nurture, will no longer have to worry about it.

Others will go to the trouble of earning the foreign exchange the Barbados economy needs from tourism in order to survive, while the Neal & Massy group’s operations here will just apply to the Central Bank for the same foreign exchange to import all the goods it sells locally, but not helping to put a penny in the pot.

I am confident that Barbados will recover from the “exit wounds” being inflicted on it by this regional group. But I am not sure if Neal & Massy will recover from the damage it is doing to itself by its terrible handling of the situation. Exit wounds may heal, but their scars run deep.

Pat Hoyos is a publisher and business writer.