(CNS Business): The reserve price for the sale of the Ritz-Carlton-Grand Cayman has been slashed from US$250 million to US$177.5 million, according to documents from Eastdil Secured Ltd, the specialist firm holding the auction later this month. The five-star resort is set to go under the hammer as RC Cayman Holdings LLC seeks to recover a debt owed to the firm by the previous companies, formerly owned by Michael Ryan, that it seized earlier this year through legal action. However, the reserve price has been cut by around 30% and falls short of the total outstanding loan amount of US$234 million plus interest, which it purchased for an undisclosed sum in May 2011 before calling in the debt.

The firm is selling the resort, comprising 365 rooms and suites, 12 unsold condominiums, 14 unsold lots designated for a villa development of “deckhouses”, as well as the additional vacant land available for future development associated with the Ritz project, at auction on 31 October at the offices of Conyers Dill & Pearman (Cayman) Limited in George Town. The amenities now include the resort’s nine-hole golf course known as the “Blue Tip Nine”, as well as other facilities.

Anyone wanting to buy the property will have to be quick as the deadline for registration is noon on Wednesday 17 October. The property is being sold as managed and operated under the Ritz brand and as a job lot with the documents stating that it will not be split up. However, it will only be open to bidders and CNS Business was informed that, despite the public interest in the sale of Cayman’s only five-star resort, the press will not be allowed into the auction.

In order to qualify as a bidder, interested parties must be present at the auction, either personally or through a representative, and be already registered, having handed over an advanced deposit of US$8,875,000 and demonstrated their ability to pay the rest should they be the highest bidder. The cash sale will be to the highest qualified bidder and if the reserve sale price is met by one bidder and there is no further bidding, that bidder gets the hotel. The minimum bidding increments will be US$100,000 unless otherwise agreed by the auctioneer during the auction. 

It is not clear why the reserve price has been cut since the earlier announcement of $250 million or how much RC Cayman paid for the loan when it bought the debt in May 2011 from the New York-based Credit Suisse subsidiary Column Financial, Inc. That firm had previously bought the original debt from the Royal Bank of Scotland when it stood at $161 million but had increased the loan to $250 million.

RC Cayman began taking legal action against Ryan and the companies that he owned, which in turn owned the Ritz, earlier this year and since then claims and counter claims have been flying through the Cayman Islands courts.

In the most recent hearing it was revealed that the companies operating the Ritz Carlton are insolvent to the tune of US$340 million. RC Cayman has accused Ryan of moving millions of dollars from the companies without proper explanation. However, Ryan has denied all wrongdoing and says he is the one owed money as a result of his efforts to keep the hotel going.

The former companies, previously owned in large part by Ryan, also owed government some CI$6 million in unpaid duty in connection with a waiver given during development on building materials. Ryan recently stated that he was no longer responsible for that cash, which has left a hole in the public purse at a time when the local government is struggling to balance the public finances. Although government officials have contacted the KPMG, the receivers appointed by the new owners, it is not clear whether any of the money raised at auction from the sale of the Ritz will be given to CIG even if the creditors recover the price they paid for the loan and their costs.

See details of auction here

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