The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Plans for a 50 per cent expansion at SuperClubs Breezes have been “completely stymied” by Baha Mar’s failure to complete agreed land transfers, the former’s owner is alleging.

John Issa, in documents filed with the Supreme Court yesterday, is claiming the “Cable Beach Goliath” wants ‘to have its cake and eat it, too’ at his resort’s expense by not fulfilling the terms of a 2011 Letter of Intent agreed between the two parties.

The SuperClubs Breezes owner’s affidavit supports an application for a Supreme Court injunction, which would “preserve the status quo” by stopping Baha Mar treating the land parcels subject to the ‘swap agreement’ differently from what was agreed in the Letter of Intent.

Tribune Business first revealed the legal dispute between the two Cable Beach resorts back in May, with Mr Issa subsequently telling this newspaper he was confident the matter would be resolved amicably. Given the latest Supreme Court salvos, that optimism looks misplaced.

For Mr Issa alleged that SuperClubs Breezes had “lost control of its own destiny”, with its new wastewater treatment plant - suffering from alleged design flaws and leaks - being operated by Baha Mar on land that had not been transferred to the former’s ownership.

Claiming that his resort was “now at the tender mercy of Baha Mar”, Mr Issa alleged that the failure to effect the land swaps was holding up his resort’s expansion plans, investment and creation of more jobs for Bahamians.

“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.”

Effectively, Mr Issa 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.

“The injunction summons is to prevent Baha Mar, this Goliath and Colossus which bestrides Cable Beach, from ‘having its cake (and also that of Breezes) and eating it too’, and instead preserve the status quo, as it should normally exist before completion of the Letter of Intent, until such time as Baha Mar complies with its obligations under the Letter of Intent,” Mr Issa alleged.

Central to the dispute is the 0.66 acre parcel upon which SuperClubs Breezes initial wastewater treatment plant stood. This, under the Letter of Intent, is to be swapped for land of the same size, upon which Baha Mar has built a replacement plant at its expense.

Mr Issa alleged that the $3.5 billion Baha Mar project was “a non-starter” without SuperClubs Breezes’ co-operation and agreement to move the wastewater treatment plant, as it was located at “the epicentre” of the resort campus.

“A sewerage plant smack dab in the middle of Baha Mar’s new hotel would, to say the least, be difficult for guests of Baha Mar to swallow, let alone stomach,” Mr Issa alleged.

But he claimed that Baha Mar had “simply helped themselves to Breezes’ property”, destroying the existing plant and building its project on the property - all while failing to complete the compensating land transfers agreed in the Letter of Intent.

“Baha Mar’s project was of great potential economic benefit to the Bahamas,” Mr Issa alleged.

“Accordingly, with good faith, goodwill and intent, I caused Breezes to enter into the Letter of Intent to facilitate Baha Mar’s project for the purpose of transferring to Baha Mar the 0.66 acres of land at the epicentre of Baha Mar’s planned hotel property upon which the existing wastewater treatment plant was located.”

The 2011 deal, as previously reported by Tribune Business, also involves Baha Mar’s golf course-owning affiliate, BMP Golf, transferring another 2.27-acre parcel to SuperClubs Breezes.

The latter also agreed to change the leasehold boundaries of its property, surrendering two areas and gaining an equivalent-size piece of land, to help Baha Mar.

“I regarded this arrangement as tremendously beneficial to Breezes. It would allow Breezes to own one large consolidated land area directly across the street from Breezes,” Mr Issa said, this property including the resort’s current parking lot.

“Given the scale of Baha Mar’s project and the competition it would give Breezes, I hoped to make a virtue out of necessity lest Breezes, the ‘David’, be driven out of business by the proverbial ‘Goliath’,” Mr Issa alleged.

“Breezes anticipated that the works and exchanges agreed in the Letter of Intent would happen quickly, and that even the necessary Town Planning and government approvals for permits, etc. would happen fairly rapidly, as not only was this provided for in the Letter of Intent, but Breezes, Baha Mar and the Government were keen to see the project come to fruition urgently.”

This, Mr Issa said, gave him the confidence to plan the 50 per cent expansion of SuperClubs Breezes’ room inventory by adding another 200 units, with completion timed to coincide with Baha Mar’s opening date.

He added that the resort was also aiming to exploit synergies with Baha Mar, in a manner not dissimilar to the relationship between Atlantis and Comfort Suites, with the two enjoying mutual benefits.

“Regrettably, history has shown that my hopes and aspirations were misplaced,” Mr Issa alleged.

“Regrettably, the spirit of co-operation proved short lived as delays encountered by Baha Mar in procuring subdivision approvals and design flaws ,and other problems with the new wastewater treatment plant built by Baha Mar for Breezes, coupled with an increasingly aggressive attitude of Baha Mar, began to erode the confidence Breezes had reposed in Baha Mar.”

Mr Issa alleged that Baha Mar had “walked away” from its own proposal to resolve the situation surrounding the new wastewater treatment plant; had demolished the old one without his resort’s knowledge; and had prevented Breezes from inspecting the new facility.

Claiming that Baha Mar was “doing whatever it pleases”, Mr Issa confirmed both sides “have been at odds for some time now”, and accused the $3.5 billion developer of employing “bullying tactics” and trespassing on its land.

He added that Breezes had only allowed Baha Mar limited access to its property for the purpose of building the new wastewater treatment plant.

“Despite the valiant efforts of Breezes’ transactional attorneys, Higgs and Kelly, the land exchanges contemplated in the Letter of Intent have still not completed,” Mr Issa alleged.

“Higgs and Kelly has continued to chase Baha Mar’s various in-house and transactional counsel at every opportunity, and to correspond with Baha Mar’s title insurers in an effort to procure title insurance covering outstanding issues with Baha Mar’s title, thus far in vain and futile attempts to complete the Letter of Intent.”

And the Breezes owner further claimed: “Baha Mar has demonstrated a pattern of behaviour which makes it evident that Baha Mar either cannot complete the Letter of Intent or is intentionally delaying completion, and/or intends to string Breezes along, preventing Breezes from enjoying the benefits Breezes thought they would derive under the Letter of Intent.....

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

Mr Issa alleged that Baha Mar was taking more of SuperClubs Breezes land and using it for purposes not agreed in the Letter of Intent.