The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Resorts World Bimini yesterday alleged it will suffer a “minimum” $2.352 million loss if the Privy Council-ordered bar on dredging remains in place until June 4.

The developer, in documents filed with the Supreme Court to support its bid to lift that injunction, said Friday’s ruling in London had already cost it more than half a million dollars as a result of the Niccolo Macchiavelli dredger having to sit idle for three days.

Sidney Brodie, vice-president of the Capo Group subsidiary, RAV Bahamas, which is Resorts World’s partner on the controversial cruise terminal and jetty project, alleged in a May 24, 2014, affidavit that it was costing the developers $168,000 per day for the dredger to sit idle.

And if the dredging project was delayed into hurricane season, and the Niccolo Macchiavelli had to leave Bahamian waters due to an approaching storm, Mr Brodie alleged the developers would incur a further one-time $5.5 million ‘demobilisation’ fee.

“The developers have mobilised the necessary equipment for the dredging at significant cost,” Mr Brodie alleged.

“Should the developers be made to cease the dredging activity for any longer period, they will continue to be liable to Jan De Nul Projects (the dredging contractor) for demurrage charges and associated costs in the amount of $7,000 per hour or $168,000 per day for the period of time that the dredger sits idle.”

The Privy Council envisaged that the dredging injunction would remain in place until either June 4, when the developers and Bimini Blue Coalition were next due back before the Court of Appeal, or when a Supreme Court hearing could be held.

Resorts World and the Government have chosen the latter option, moving with incredible speed and urgency over the weekend in response to the Privy Council ruling. All necessary documents were filed for them to get the issue before Justice Hartman Longley in Freeport yesterday, as they mounted an immediate bid to overturn the dredging block.

Mr Brodie’s affidavit, which is one of those documents, said the increasing costs being incurred by the developers were part of the agreement with Jan De Nul Projects.

“As demonstrated, the developers have suffered loss up to today’s date in the sum of $504,000 with respect to three days’ stoppage as a result of the Privy Council injunction,” he alleged.

“A delay of two weeks [until the July 4 Court of Appeal hearing] will result in a minimum of $2.352 million in financial losses.”

Mr Brodie’s affidavit then effectively made the ‘financial Armageddon’ play, warning of further multi-million dollar losses should dredging activities off North Bimini be delayed into the 2014 hurricane season that starts on June 1.

“If dredging is delayed, and the injunction is not discharged, and the result is that the developers encroach into the hurricane season, there is a real risk that the dredger will be unable to continue its operations in the event of a storm,” Mr Brodie alleged.

“In the event the dredger will have to leave Bahamian waters, the developers will incur a further mobilisation and demobilisation cost of $5.5 million upon the dredger’s return in the fall post-hurricane season.”

In reality, the multi-million dollar losses cited by Mr Brodie can, at the moment, be easily absorbed by the deep capital pockets of Resorts World’s parent, the Malaysian conglomerate, Genting.

However, any delay in the dredging schedule will have knock-on ramifications for Resorts World Bimini’s business model, and its ability to decamp hundreds of visitors from Florida to its Bimini Bay property during rough weather.

That, in turn, will impact Resorts World’s revenue streams and profitability, and delay a return on investment that to-date totals around $275 million (including the new Bimini hotel and Bimini Superfast cruise ship).

Apart from the financial costs, Mr Brodie alleged that the dredging injunction might also force Resorts World Bimini to find a new contractor for the cruise ship terminal and pier if it remains in place.

“The dredging material is being used to construct the man-made island,” Mr Brodie alleged. “Cessation of dredging will directly result in cessation of the work related to the construction of the terminal island currently being carried out by COMSA, the construction company.

“Under clause 15.4 of that contract, COMSA is at liberty to terminate the contract with the developers as a result of work stoppage in circumstances such as these.”

Other interesting disclosures in Mr Brodie’s affidavit are:

• Without explicitly saying so, Resorts World is effectively blaming the Government for its failure to obtain a dredging permit under the Conservation and Protection of the Physical Landscape of the Bahamas Act 1997.

The developers are alleging that they submitted a permit application under this Act back in December 2013, but were instead told by the Prime Minister’s Office and Michael Major, director of physical planning (and who is supposed to be responsible for issuing such permits, to deal with the Department of Lands and Surveys.

As a result, Resorts World was dealing with an agency that did not have the statutory authority to issue the necessary dredging permits.

“The developers’ application for permits and approval to dredge was first submitted in December 2013 under the prescribed form of the Conservation and Protection of the Physical Landscape of the Bahamas Act,” Mr Brodie alleged.

“When attempting to submit the dredging application, I was directed by either the Office of the Prime Minister or the director of physical planning, Michael Major, to take the dredging application to the Department of Lands and Surveys.

• The developers are blaming “a severe weather storm” on the May 17 weekend for breaking up their silt protection barriers and washing some ashore.

They are arguing, though, that the “breakage of the silt curtains was not widespread notwithstanding the severity of the storm”.

“On Saturday May 17, a severe weather storm struck the island of Bimini and surrounding areas,” Mr Brodie alleged. “As a result of the severe weather, the silt curtains installed in accordance with the Environmental Impact Assessment (EIA) and Environmental Management Plan were taken away by strong currents and washed ashore.”

To back these claims, a five-day forecast showing “severe wave swells and severe winds” experienced by Bimini were produced. The Coalition, though, is likely to argue that the silt curtains should have been strong enough to withstand these conditions.

• Finally, Mr Brodie’s affidavit reveals that RAV Bahamas, the Capo Group subsidiary that was the original Bimini Bay developer, “is responsible for the management and oversight of the dredging operations” - not Resorts World Bimini and Genting.