Controversial plans by two foreign firms to develop the Bermudiana Hotel site have cleared a key hurdle.

A special House of Assembly committee has recommended ACE Ltd. and Exel Ltd.

be given the go-ahead.

And if MPs agree, it would allow the insurance firms to bypass the rule which states any business must be at least 60 percent Bermudian owned.

Yesterday bosses for the two companies welcomed the latest development.

Said Exel's Senior Vice-President Gavin Arton: "This is a good start.'' ACE chairman, president and Chief Executive Officer Brian Duperreault, declared: "This is a good step.'' Meanwhile, rival developers for the Bermudiana site -- Bermuda Financial Centre Ltd. -- were also claiming a possible breakthrough yesterday.

BFCL chairman Neville Conyers said he had high hopes of raising the $100 million needed to develop the property.

Negotiations with financing companies in Boston and New York were going well, he added.

"I understand we should have finances in effect by the end of this year.'' BFCL's scheme includes a hotel, offices and luxury homes -- some 45 apartments.

The decision over who wins the battle for the Bermudiana rests with Argus Insurance, which took over the Pitts Bay Road site after BFCL was unable to repay loans.

ACE and Exel recently agreed to buy out Winson Holdings Ltd. -- owners of the derelict hotel -- from Argus.

But the deal hinges on planning permission for any future scheme and an exemption from Bermuda's 60/40 rule which says any business must be at least 60 percent Bermudian owned.

The companies launched the Bermudiana Site Rehabilitation Act 1996 -- a private act seeking permission to buy Winson and bypass the 60/40 rule -- which received its first reading in the House of Assembly on Friday.

If the Act is passed, the companies plan to demolish the Bermudiana and landscape the grounds as the first stage of redevelopment.

The Joint Select Committee on Private Bills -- which includes MPs and Senators -- has recommended the Act be approved.

But it made a number of minor amendments after meetings involving technical officers, said committee member Trevor Moniz, a Government backbencher, yesterday.

"The committee looked at technical aspects of the bill, such as the drafting,'' he said. "It also gave a general recommendation on the advice of technical officers.'' He added: "Normally with private Acts, once the report of the Private Bills Committee has been received, all three readings are done at once.

"With this Bill, because of the nature of it, the second and third readings have been put over until the next sitting of the House in February.'' Mr. Moniz said the substance of the Bill remained intact -- the bypass of the 60/40 rule.

"It's a big exception to the normal rule. We haven't had an outright purchase of land by a non-Bermudian company for many years.'' Bermudiana Mr. Arton believed MPs were scheduled to vote on the Act in February.

"I would characterise this as a good first step and as progress. Now I look forward to the House reconvening.'' He pointed out both companies had put a deadline of March 31, next year, for the Act to be passed and the deal completed or they will drop their interest.

"We are still very much sticking to that deadline.'' If the Act passed, one of Exel and ACE's first steps would be to bring in a demolition crew and landscape the site.

"It will take a year or two to get the plans commenced, which will give us time to clean the site up. We will not be building right away.'' Mr. Arton reckoned it could take three or four years to put up the office complexes.

One of the complexes planned would cover about 75,000 or 80,000 "usable'' square feet, another would be slightly smaller.

Mr. Arton said the two firms may build up to four buildings.

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