The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar has warned it would lose “hundreds of millions of dollars in expenses and lost revenues”, and employment for thousands of Bahamians would be delayed, if a rival Cable Beach resort is granted its injunction application.

The Supreme Court, in the shape of Justice Milton Evans, will today hear SuperClubs Breezes’ arguments for an injunction that would preserve ‘the status quo’ in relation to the two resorts’ land swap agreement.

The swap, as outlined in a 2011 Letter of Intent between Baha Mar and SuperClubs Breezes, is vital to the former’s Cable Beach redevelopment, which could not take place without it.

For it facilitates the removal of SuperClubs Breezes’ original wastewater treatment plant, which sat in the middle of Baha Mar’s new hotel, and its re-location and replacement on another site. Other land parcel transfers were also involved in the deal.

However, the two parties have yet to complete on the Letter of Intent’s terms. And, with Baha Mar enjoying effective possession of SuperClubs Breezes’ former land, and the associated benefits, the latter’s parent company, PPL (Nassau), is seeking the injunction to return both sides to their original positions until final completion.

Tracy Ferguson, Baha Mar’s associate general counsel, in a November 21, 2014, affidavit outlining Baha Mar’s opposition to the injunction, warned that its granting would have a significant negative impact on the $3.5 billion project.

“Should the court grant the plaintiff’s application and make an order for an injunction, this would have the effect of substantially delaying the project, costing hundreds of millions of dollars and expenses and lost revenue (which cannot be quantified),” Ms Ferguson alleged, “and delaying the hiring of thousands of Bahamians essentially because Mr Issa [SuperClubs Breezes’ owner] is unwilling to honour a binding Letter of Intent.”

She added: “The construction project is moving along a timeline in respect of which any stoppage would result in massive commercial loss and damage, likely to be many multiples of the stated capital value of PPL and the value of its assets in the Bahamas.”

Arguing that the injunction application was “wholly inconsistent” with the Letter of Intent’s purpose, Ms Ferguson alleged it had been made “in bad faith” and was designed to both embarrass Baha Mar and its principals, plus delay its $3.5 billion development.

Ms Ferguson then claimed that the application was an attempt by SuperClubs Breezes and its operating parent, PPL, to obtain “a bargaining chip to secure further advantage” over the Letter of Intent swap.

However, Mr Issa, as previously revealed by Tribune Business in his own affidavit, alleged that Baha Mar is “enjoying the benefits” of owning his resort’s property without letting Breezes have its share by completing the Letter of Intent. And with Baha Mar already having its fruit, he claimed there was no incentive for it to complete the deal.

He claimed that Baha Mar had taken SuperClubs Breezes’ property and used it for its construction project, while failing to complete the compensating land transfers agreed in the Letter of Intent.

But, outlining Baha Mar’s position, Ms Ferguson said the developer’s position is that “from the date of the Letter of Intent”, both sides became beneficial owners of the land parcels they were due to receive under the swap agreement,

She alleged that there was nothing to prevent either party “entering into possession” of the land parcels each was to receive prior to title transfer and the Letter of Intent completion.

Ms Ferguson also alleged that the land swap agreement was tilted to SuperClubs Breezes’ economic advantage, with Baha Mar receiving just 0.66 acres of land in return for handing over 2.87 acres “of contiguous land” valued at more than $2.1 million.

“PPL obtained the benefit of a reconfigured parcel of leased land and an option to renew the same for an additional term of 45 years,” Ms Ferguson alleged.

“The total acreage that Baha Mar will convey to PPL is six acres, which so substantially benefits PPL that, according to Mr Issa, PPL intends to use the entire acreage to increase its Breezes Hotel room count by as much as 50 per cent, as well as to construct a new restaurant.”

Baha Mar is alleging that SuperClubs Breezes has enjoyed its new wastewater treatment plant since March 11, 2013.

Yet, in return, it is claiming that the old plant, and 0.66 acres it received, were in “an unhealthy state” due to contamination from that facility. Baha Mar says it remediated this at its own expense, and it “categorically denies” claims it trespassed on the land, or removed the plant unlawfully.

Ms Ferguson, on the $3.5 billion developer’s behalf, also alleged that SuperClubs Breezes “utter neglect” forced it to clean up one of the land transfer parcels, while area was levelled to ease traffic congestion involving taxis, food vendors and Baha Mar personnel.

Baha Mar’s improvement efforts stopped once the injunction was filed, and it added that no soil had been removed from SuperClubs Breezes’ intended property.

Ms Ferguson alleged that obstacles to completing the Letter of Intent included SuperClubs Breezes engaging a surveyor to confirm physical property boundaries; its “unreasonable demands” for “exorbitant” legal fees; objections to access from its property to Baha Mar’s casino and revisions to transaction documents.

“Baha Mar desires completion of the Letter of Intent as soon as possible,” Ms Ferguson alleged. “Baha Mar has made, and continues to make, all good faith efforts to bring about the completion of the outstanding matters.....

“Despite excuses, tactics, legal charades and the resulting delays brought about by PPL, the real resolution to matters between the parties would be achieved by completion of the Letter of Intent, in respect of which Baha Mar is ready, willing and able to perform.”

Ms Ferguson’s affidavit also hinted at an allegedly strained relationship between the two resorts.

It claimed that negotiations with SuperClubs Breezes began in 2006 and lasted for two years, ending without success in 2008 because it “requested the payment of millions of dollars to co-operate and not delay the start of construction” at Baha Mar.

The Government then got involved to help produce the 2011 Letter of Intent.

Mr Issa, in his affidavit, alleged that Baha Mar’s failure to complete the Letter of Intent terms had stymied his expansion plans.

“Breezes has not been able to proceed with its expansion plans within the timeframe anticipated, so that Breezes expansion could have been complete and in time with the opening of its competitor,” the Jamaican hotelier alleged.

“As it is, Baha Mar will be having its Grand Opening soon, while Breezes’ expansion plans are held ransom to Baha Mar’s timetable and dispensation.

“Indeed, Breezes’ plans have been completely stymied as Baha Mar continues to use Breezes legal and or equitable assets for Baha Mar’s own purposes.....

“To date, Baha Mar has failed to deliver the ‘quid pro quod’ promised to Breezes. This is simply unfair and inequitable to Breezes.”