BRILLA GROUP: GOVERNMENT HAS ALL THE CARDS FOR CAP JULUCA

July 24, 2012

Dear Anguillians,

1. Unfortunately what was predicted has happened.  Cap Juluca is in terrible shape and rather than admit defeat, Hickox seeks to save his purchase on the backs of Angullians and on the backs of the owners of villas 1, 2, 3, 8 & 17, representative of 27 of the 95 rooms at Cap Juluca.  It is time to stop looking for short-term solutions and start focusing on solving the long term problem.  Let’s turn to the facts.

Facts:

We understand that Hickox has threatened to close the Resort unless theGoAforces the villa owners to involuntarily concede their property over to Hickox’s management. We understand that Hickox has no ground lease with the Crown, no Alien Landholding License (ALHL), no business license, and no financial wherewithal to consolidate the Resort, let alone renovate and develop the property to its potential, a task that, all told, will easily require US$30,000,000-50,000,000 of new capital.  He owes the Government of Anguilla (GoA), by our estimation and on our belief, at least US$6,000,000 in transfer taxes and ALHL fees, as well as millions more to the Crown/GoA as lease payments and other obligations under the lease, like social security payments and accommodation taxes, have not been paid for years (assuming he wants to own the Resort legally, he must assume all those obligations).  Essentially, Hickox needs the people ofAnguillato give him, by our estimation, US$11,000,000 to keep the resort open.

As referenced, we believe that he has requested that theGoAforce us into the Hickox rental program. For the record, we want to rent our villas, just not under his management.  We want to cooperate to put all our units in operation, but we want to protect our interests.  Our choice has been  either  play  Hickox’s  game  or  live  within  a  hostile  resort.   Facing  the  prospect  of  such treatment, we have repeatedly offered Hickox the opportunity to  buy  us out at cost, without interest.  He does not seem to have the money.

Why should you, the people ofAnguilla, give your rights, and the money due to you, away?  Why should we?

2. Even if the people ofAnguilla decide to give away all their money, the resort cannot make money and is not viable without all its rooms.  More to the point, we have seen no indication that Hickox has the money to build new rooms  to get back to the current number of keys that were unified under  previous  owners,  let  alone  expand  the  resort  to  a  truly  stabilized  and  healthy  resort operation.  It’s our understanding that Hickox has told theGoA that, if they concede on every point in Hickox’s proposed MOU and illegally compel us to give over to his forced management, he will be able to obtain third party financing.  How is this possibly legal or ethical?  And yet, there are numerous world class hospitality groups and operations that would be willing to step forward and own and operate this resort if Hickox would get out of the way.  We are willing to work with any group that will pay the GoA and Crown what is owed, invest in the property, and honor the property’s binding agreements.

Facts:

Brilla, Manfredi and Rowan bought their villas for over $20,000,000 in cash.  We bought these villas even though Cap Juluca was facing legal difficulties with Hickox.  It was a condition of our purchase that we have the ability to separate our villas from the resort (and manage rental ourselves or with an entity we agreed upon) and still have access to resort facilities as well as services being provided to guests of our villas.  In the sense of shared use of facilities and services (that we agreed to and as provided in our subleases), we would absolutely remain a part of Cap Juluca.  Our guests could use the  beach,  rent  chairs,  go  to  the  resort’s  restaurants,  etc.   These  agreements  and  rights  are memorialized in our subleases, our ALHLs, the ground lease with the Crown, and the declaration of covenants, conditions, and restrictions that govern the resort.  Hickox is well aware of all this.  The GoAand the Crown are most certainly aware of this, and we have continually put them on notice of their rights and ours.  Every relevant party here was and remains on notice of our rights, all of which were   negotiated   and   part   of   bona   fide   transactions   and   our   cash   investment   in   the resort.   Furthermore, and we repeat for emphasis, we are willing to work with any group that will pay the GoA and Crown what is owed, invest in the property, and honor the property’s binding agreements, including our subleases. Indeed, we are ready and willing to operate our own villas,  employ Anguillians and serve guests, but Hickox is preventing us from doing so by refusing to cooperate in any way unless we agree to his rental management.  It is for this reason that we have padlocked our villas; not to prevent use of our villas or guests from utilizing the resort, but to prevent the illegal taking of our villas by parties  who have no legal or demonstrable right (or agreement) to operate or manage them.

3. Not only does Hickox need the people ofAnguilla to give him millions of dollars but he needs to confiscate our property to make his scheme work.

Solution:

GoAholds all the cards.  If Hickox fails to pay the money due under the ground lease, terminate the lease.  If he fails to pay the alien landholding license fees and transfer taxes, this is another default and his interests would be subject to forfeiture or reversion.  Only give an ALHL, business license, or ground lease to a world class operator who will not only pay the money to GoA that is due under its  agreements  but  has  the  money  to  renovate  the  broader  resort  and  develop  the  property further.  Only with these requirements in place and upheld will the future ofAnguillabe built upon a strong foundation; otherwise the island will not prosper.  If Hickox is unable or unwilling to meet these basic  requirements,GoAshould take back its crown jewel and bring in a strong financial partner and world class talent to operate the resort.

TheGoA  and  Crown  have,  to  date,  shown  exceptional  patience.   At  some  point, GoA  must act.  Without an immediate payment of all monies owed under the lease and the applicable taxes and fees, as well as an assumption of  all obligations under the ground lease and subleases (the legal obligations that Hickox stepped into the lease after  his “credit bid” auction on May 2nd), GoA should forfeit Hickox’s rights for his ongoing default(s).  If he can’t remedy those defaults, he has no right to be the legal owner of Cap Juluca.  GoAshould require Hickox, or any owner of Cap Juluca,to meet the standards necessary to own and operate a property that is so important to the economic sustainability of the island of Anguilla.  Failing to enforce such requirements, and the ground lease agreement’s conditions and own provisions, will be a major step back for the island.