The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A controversial Austrian businessman with a history of regulatory run-ins has emerged as the third, secretive bidder for New Providence’s South Ocean resort property, Tribune Business can reveal.

Dr Mirko Kovats, a Bahamas resident who has a home in Lyford Cay, was confirmed by multiple sources to have submitted an offer to acquire the still-closed 383-acre property, which is adjacent to landholdings he owns.

Dr Kovats was said by sources to have “been flying under the radar” with his attempt to acquire South Ocean from its existing owner, the Canadian Commercial Industry Workers Pension Plan (CCWIPP), and snatch it from the grasp of rival institutional bidders.

His interest in the 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 Dr Kovats’s 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.

News of Dr Kovats’s involvement in the process to decide South Ocean’s fate was met with mixed reactions by Tribune Business’s contacts. Speaking on condition of anonymity, they suggested that while the Austrian was certainly capable of financing the purchase, his track record - both in the Bahamas and elsewhere - raised question marks.

“He has a history of sitting on property in the Bahamas and doing nothing with it,” one contact said, suggesting that if CCWIPP selected Dr Kovats as its preferred bidder, he would likely hold South Ocean and seek to flip it for a higher price to another buyer.

Another added: “He is financially capable and seems to be a player. There’s a possibility he could be financially capable of acquiring South Ocean, but there’s another whole mountain to climb once you acquire the property.

“Government wants institutional bidders, not individuals. An individual can always pack up his bags and leave when anything hits the fan.”

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. Tribune Business has made several efforts over the past three days to contact Dr Kovats for comment, but the phone number listed at his Lyford Cay home just rings out and goes unanswered.

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.

His Wikipedia profile describes Dr Kovats as an example of a businessman “who places shareholder value above all else”.

It added: “Due to his unconventional business practices and methods of financing, and his sometimes spectacular transactions, Kovats has repeatedly been accused of risky, unfair or even criminal activity.”

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.

The Austrian is up against formidable competition in the battle to acquire South Ocean. His leading rivals include 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.

Both Albany and Argent will be in good standing with the Christie administration due to their existing Bahamian investments, likely making government approvals of their bids a formality. Albany is probably in better stead, given that its investment is larger and has already created jobs.

It is understood that Och-Ziff would provide the financing, while Albany’s developers will offer management, operational and development expertise.

Several sources last week suggested that CCWIPP was leaning towards Dr Kovats, although this was quickly dismissed by Government and other sources, who said the pension fund had yet to reach a final decision.

“I don’t believe they’ve made a decision,” said a source close to one of the South Ocean bidders. “It’s not a simple decision. It’s something they’ve got to work out.

Khaalis Rolle, minister of state for investments, confirmed that CCWIPP trustees had met with himself, Prime Minister Perry Christie and the latter’s senior policy adviser, Sir Baltron Bethel, last week to discuss South Ocean.

While declining to comment on the details of their meeting, Mr Rolle confirmed that CCWIPP had yet to select a winning bidder.

“We are working with the pension fund, and I believe we are making significant progress in the process,” Mr Rolle told Tribune Business. “I believe that in short order some decision will be made, along with the Government.’

Mr Rolle reiterated that the Government saw South Ocean as the last ‘mega resort and casino’ project for New Providence, saying the island’s tourism plant and infrastructure would be fully built-out once the property fulfilled its potential.

“When you look at the expandable opportunities in that sector, that is quite possibly the only viable option that is readily available and can be executed over the medium and long-term,” he explained of South Ocean.

“Once that is done, our major tourism plant in New Providence will be built out. That clearly indicates that the Government sees that as the only viable candidate to provide us with good results in tourism and not cannibalise any of the existing products.”

The Government previously cut the umbilical cord tying New Providence’s third and last casino licence to South Ocean, announcing it would be made available to the first investor who comes along with the correct proposal that is fully financed.

That has encouraged Tennyson Wells and his fellow investors with their $1 billion Coral Harbour project proposal, which is reliant on snatching the casino licence currently linked to South Ocean.

Mr Rolle said the door remained open for Mr Wells’s project, but added that any South Ocean purchaser would be able to execute and “get up and running” quicker because of the infrastructure and incentives already in place.

“Whoever comes with a viable proposal with funding, that’s what I’m more interested in than anything else. A viable proposal with funding attached,” Mr Rolle told Tribune Business.