The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is growing increasingly impatient with South Ocean’s owner over finalising a preferred bidder for the property, with no formal application yet submitted to the Bahamas Investment Authority (BIA).

Khaalis Rolle, minister of state for investments, said the south-west New Providence property’s redevelopment remained “a major priority” for the Christie administration, which wanted the buyer selection process “formalised”.

His comments come amid reports that South Ocean’s current owner, the Canadian Commercial Workers Industry Pension Plan (CCWIPP), and its advisers have selected controversial Austrian financier and Bahamas resident, Dr Mirko Kovats, as the preferred bidder.

“There was an indication that he was the preferred bidder,” one government official said, speaking on condition of anonymity, as they were not authorised to talk on the South Ocean. “The Government has not received a formal application as yet.”

Multiple others sources close to the situation have confirmed this to be the case, and the move is likely to raise eyebrows among observers as it would mean CCWIPP has rejected two rival institutional offers with multi-billion dollar backing in favour of Dr Kovats.

Those bids came from New York-based Argent Ventures, a private New York-based real estate developer, some of whose principals were involved in the $8-$12 million purchase and renovation of West Bay Street’s Nassau Palm property.

Argent has considerable means, owning the land under New York’s Grand Central Terminal. The company also owns the Capitol Records Tower in Hollywood, California, and Miami’s Omni International Mall.

Rival number two is the joint venture between the Albany developers and Och-Ziff, the hedge fund and asset manager with over $40 billion in worldwide assets. It is understood that Och-Ziff would provide the financing, while Albany’s developers will offer management, operational and development expertise.

Tribune Business sources, though, have confirmed that Dr Kovats has been busy bolstering his offer’s credibility by attracting reputable partners. This newspaper understands he has been successful to some extent, having attracted Baha Mar’s main contractor, China State Construction, to be his construction partner for South Ocean.

A telephone number listed for Dr Kovats at Lyford Cay rang out unanswered when called by Tribune Business yesterday. His dealings with China State Construction, though, have created a problem for Prime Minister Perry Christie.

It is understood that while he would prefer either Argent or Albany/Och-Ziff as the buyer, his government cannot simply dismiss a bid involving China State Construction as this would effectively mean saying ‘no’ to the Chinese government.

“He’s not pleased with the delays and the way the Canadians are dragging out this process and the property. He’s not pleased with the Kovats selection, and he has no deal with the Chinese group. It’s a construction contract, not as equity partners,” a source told Tribune Business of the Prime Minister’s feelings. “The Canadian group is taking its time doing a deal, and is going through the motions.”

Mr Rolle hinted at the Government’s impatience, and desire for a quicker resolution to the South Ocean process, in a brief interview with this newspaper.

“The Government met with the pension fund at the closure of the process, when they had identified the proposed bidder, but no formal application has come to the Government on it yet,” Mr Rolle told Tribune Business.

“We would like to see the process concluded, formalised with the Government and to get some development going at South Ocean. It’s a major priority.”

The Government sees South Ocean as the last ‘mega resort and casino’ project for New Providence, believing the island’s tourism plant and infrastructure will be fully built-out once the property fulfills its potential.

However, the concern now is that the time CCWIPP takes to determine a buyer - especially one acceptable to the Government - could cause the likes of Argent and Albany/Och-Ziff to walk away from a potential deal.

One source close to the bidders said: “The last conversation they had with the fund, they were still in the process of determining their preferred bidder.

“The bidders were putting pressure on them, as they wanted a timeline. The pension fund indicated they were hoping to make some form of announcement in the next three to five weeks, maximum.”

The source added of CCWIPP: “They’ve made it tough. I don’t think the process went as it should have gone. You have to strike when the iron is hot. When you have a preferred bidder or selected bidder, you have to move forward with that bidder and let the others know where they stand. The bidders are waiting patiently for which direction they’ll go.”

Another source close to the bid process said simply: “They’re [the pension fund] still working through their options.”

They added that, in the case of Dr Kovats and his bid, “everyone’s still trying to figure out whether he’s committed to this development as opposed to buying land”.

Suggesting that the Austrian financier had a “track record” of sitting on Bahamian real estate as opposed to developing it, the source said it was vital that any South Ocean purchaser have the financial capability to do what was necessary.

Dr Kovats’s interest in the 383-acre property, long earmarked as New Providence’s third ‘mega resort and casino’ development after Paradise Island (Atlantis) and Cable Beach (Baha Mar), is obvious given his existing landholdings in the area.

Contacts familiar with south-west New Providence’s geography confirmed that the Austrian owns four-five acres situated strategically between Albany and South Ocean, although this real estate was said to not be “seamlessly contiguous” with the latter.

Dr Kovats’s intentions, and plans, for South Ocean should he win the bidding remain unknown. However, the Government will not simply let him ‘sit and hold’ the property, as it wants South Ocean developed into something that will create hundreds of jobs and generate multi-million dollar economic activity.

Dr Kovats, though, has attracted controversy in his native Austria throughout his business and investing career, despite building his publicly-listed industrial group, A-Tec Industries, into a conglomerate that once featured over 70 companies and more than 10,000 employees, with turnover pegged at more than one billion euros. He invests through his private foundation, MUST.

Numerous companies he was involved with early in his business career became insolvent, and Dr Kovats has faced numerous civil lawsuits during his business career, being criminally indicted twice.

He was sentenced to six months’ probation in 2000 by the Vienna High Court over the bankruptcy of a nightclub he had invested in. Dr Kovats was also charged over another nightclub insolvency in 2007, although he was never convicted.

Tribune Business’s own research also found that Dr Kovats and a fellow executive were fined by Austrian regulators in 2012 for providing misleading information to the capital markets, thus harming investors. Following a two-year period of turbulence that began in 2011, A-Tec moved to restart business activities in 2013, after undergoing a reorganisation.