The water supply situation at Red Frog Beach has become critical. It is currently the low season for tourism and the wet season for rainfall. And yet the water storage and distribution system can barely supply the needs of the permanent residents. The water supply to the marina is frequently cut off. Even so, some villas, and hence guests, have recently been left without water. Some of the villa pools are in such a state of neglect that they are turning green with algae.
The crumbling infrastructure is due to neglect and lack of maintenance for many years as Joe Haley has been playing a financial shell game trying to keep the resort afloat. In prior years he has relied on additional investment from the senior partner, Steve Bolton. But it appears that Mr. Bolton’s ability or willingness to continue pumping more cash into the project has dried up. Joe Haley and Steve Bolton have resorted to doing things like diverting money owed to villa owners for the rental of their villas to pay for things like diesel fuel deliveries.
The water storage and distribution infrastructure has one or more leaks that the company is unable to locate and repair. This means that a significant portion of what scarce water is obtained from already impaired well production leaks right back out. The fact that the sewage treatment infrastructure is in such poor condition that raw sewage is being allowed to flow out onto the ground near villas could create the risk of contamination of the culinary water supply.
The lack of water at the marina has also forced a number of boats to leave. This will result in reduced revenue for the marina owner, IGY.
It is difficult to imagine how sufficient water will be available to support an influx of visitors when the high season begins in October. We predict that the result will be further reductions in revenue for OGI.
In our opinion, Red Frog Beach needs better management. Management that demonstrates integrity and transparency. Management that has access to new investment capital. Steve Bolton is believed to own more than 40% of the equity in OGI and hence he has effective control of the company. He could choose to replace Joe Haley but he has never demonstrated the resolve to do so. Superficial actions have been taken such as leasing resort operations to Casco Capital and operation of the utility infrastructure to SVF. While Joe Haley is less visible he still controls the essence of what Casco Capital and SVF are tasked with managing. Regardless of how capable Casco Capital is, for example, they are limited in what they can do if the utility infrastructure can’t support enough visitors to make the resort financially viable. Without a large infusion of capital to repair or replace crumbling utility infrastructure SVF’s hands are tied as well. Which brings us to the fundamental problem which is Joe Haley himself. Joe has broken so many promises, breached so many contracts, turned his back on transparency and stiffed so many creditors and investors that no one can rely on any promise that he makes. In that environment new investment capital is unavailable.
Large companies such as Boeing have learned the painful lesson that an executive who creates a mess isn’t the right person to lead the company out of that same crisis and restore the faith of customers and investors. The Boeing board, after exhausting every other option, has finally done the right thing by hiring Kelly Ortberg as the new CEO. Mr. Ortberg has an engineering background and is well respected in the industry. If anyone can return Boeing to its previous stature it is Kelly Ortberg.
So, Mr. Steve Bolton, what’s it going to be? Continue with the obviously failed leadership of Joe Haley or finally install a chief executive who has what is needed – integrity, ability and access to capital?
