The Tribune

Baha Mar's Bahamian creditors and former employees "can't take much comfort" from the project's financier breaking its silence, the FNM's deputy leader arguing that it merely confirmed "no deal is in hand".

K P Turnquest told Tribune Business that the $3.5 billion project's fate would likely take longer to determine than hoped, and suggested it might have to be broken up to achieve a quick resolution.

And, with Baha Mar's resort assets continuing to deteriorate the longer it remains unopen, Mr Turnquest warned that the costs to complete and open the project could soon rise to $1 billion.

Such an investment, he added, would also call Baha Mar's "economic viability" into question because of the debt load secured on its real estate assets.

"I take from it that there is no real, concrete deal in hand, and this project will probably extend further out than the Prime Minister and we had all hoped it would," said Mr Turnquest, giving his interpretation of China Export-Import Bank's press statement.

"Once again, I believe the Government has been counting its chickens before they're hatched. No one can say if something is in hand, or if this is smoke and mirrors. But if a deal was in the works, the Prime Minister would have announced it."

Mr Turnquest suggested that Baha Mar may have to be ‘broken up’ to gain a quicker resolution, with the hotels and casino sold to different buyers.

“At the end of the day, I believe they’re going to have to break this thing up into individual bits, and to find individual buyers for them,” he told Tribune Business.

The FNM deputy leader added that it was "a great question" as to whether the bank's statement was the "good news" that Prime Minister Perry Christie and the attorney general, Allyson Maynard-Gibson, had promised would soon be forthcoming.

Describing the Government as being "full of promises of Nirvana to come", Mr Turnquest pointed out that the International Monetary Fund (IMF) had recently downgraded the Bahamas' economic growth prospects due to Baha Mar.

Asked how Baha Mar's creditors and former staff should interpret the China Export-Import Bank's comments, Mr Turnquest said: "I don't think they can take much comfort from that.

"There is this real concern we all have with respect to the 2,000-plus employees let go, and have no real prospect for employment in the short-term.

"Then there is the real, significant concern for those businesses owed significant sums of money," he added, "and how this will affect not only the employment they offer but their ability to stay in business.

"Many have used the credit lines that were available to them with the expectation of recouping that investment and more, and the longer payment is outstanding the more difficult it is to recover.

"They might see their profit wiped out as a result of the delay, due to the interest charges and other fees they will have incurred."

The Prime Minister has repeatedly assured Bahamian contractors, who are owed a collective $74 million, and other creditors that the Chinese will pay 100 per cent of what they are owed.

The China Export-Import Bank's statement, released late last week, said: "We hereby solemnly state that China Ex-Im Bank has been actively working with relevant stakeholders to seek proper resolution of the issues that the project is facing, and has been maintaining close communication and contact with the Government of the Bahamas.

“Currently, there is a preliminary plan concerning the future arrangements and this will be launched as soon as practicable. The bank is working with the Government to prepare for the Convention Centre to be used for the IDB event in early April 2016.”

The statement continued: “In addition, our bank has been in contact with a number of potential investors and they have expressed initial interest in the project.

“The bank will continue to communicate with parties who have expressed initial interest in the project, and other parties who could potentially be interested in the project, as it seeks to formulate a comprehensive solution as soon as possible.”

Mr Turnquest described the bank's statement as "a little unusual", and suggested that it seemed "to be flexing its muscles a little bit" in criticising persons with alleged 'ulterior motives'.

But he added: "The longer it stays closed, the worse the prospects get for any timely resolution and opening.

“We’ve heard the stories of degeneration in the structure in terms of leaks, and the longer the building sits idle, the quicker it deteriorates.”

Mr Turnquest said estimates of the investment required to complete Baha Mar’s construction had increased from $300 million at the time of its Chapter 11 bankruptcy protection filing in June to $600 million, based on the Prime Minister’s last public pronouncements.

Add in marketing, staff re-hiring and training and other pre-opening costs, and Mr Turnquest said “close to $1 billion” may now be required to complete and open Baha Mar.

The China Export-Import Bank has already advanced close to $2.45 billion to finance the project’s construction, and completing it may take the debt load secured on Baha Mar’s real estate assets to near $3.5 billion. The remainder of the financing come from the $800-$900 million injected by the project’s original developers, the Izmirlian family.

Mr Turnquest joined those questioning whether any new investor could make Baha Mar a sustainable investment with that kind of debt load, given that Kerzner International’s Atlantis ownership was ended by ‘just’ a $2.4 billion debt.

“God help us if it’s another $1 billion,” the FNM deputy leader told Tribune Business. “Even if it was to remain at $3.5 billion, the economic viability is certainly something to be concerned about, and if it was to get to over $4 billion you’re going to see a settlement for cents on the dollar, just to rationalise the investment.”

Mr Turnquest also called on the Government to carefully evaluate whether it should still seek to stage the Inter-American Development Bank (IDB) Board of Governors meeting at Baha Mar’s Convention Centre in early 2016.

Suggesting that it might “not be the best foot forward for the country”, given Baha Mar’s current state, he added: “We might want to think about that a little bit.”

Tribune Business sources - including some ex-Baha Mar employees - disclosed on Friday that it would not require a huge expenditure to ready the convention centre for the IDB Board of Governors meeting, as the facility was already largely complete.

However, this newspaper understands that it is currently being used as a warehouse to house all the construction materials, furniture and fixtures that had to be removed from containers and placed into new storage when Baha Mar filed for Chapter 11.

While all these materials will have to be taken out and re-stored, the biggest potential problem for the IDB meeting is that the Grand Hyatt will not be open. As a result, attendees will likely have to be bussed to the convention centre from the Melia or walk across deserted parking lots.