A former Baha Mar director yesterday warned that the Government will soon “have a huge white dinosaur on their hands”, despite the project’s secured creditor promising that a solution is being developed.
Dionisio D’Aguilar told Tribune Business that the $3.5 billion development, upon which the Bahamas had placed much of its economic growth hopes, was “turning into an enormous disaster” with no immediate resolution in sight.
His comments came as the China Export-Import Bank, which took over the project via the appointment of the Deloitte & Touche accounting firm as receivers, appeared to hit out at both himself and Baha Mar’s initial developer, Sarkis Izmirlian.
Breaking a long silence, Baha Mar’s $2.45 billion debt financier, via a statement to the media, said: “We, China Ex-Im Bank, noted that some people with ulterior motives have made irresponsible remarks, which have affected the actions being properly taken by our bank and the receivers.”
The China Export-Import Bank did not identify the targets of yesterday’s statement, but it is reasonable to think they were aimed at the outspoken Mr D’Aguilar and Mr Izmirlian, both of whom have continued to criticise the actions of the Government and the Chinese in bringing Baha Mar to its current state.
And Mr Izmirlian, and his BMD Holdings vehicle, wasted no time in responding to the China Export-Import Bank, yesterday reaffirming that their proposal to complete and open Baha Mar remained on the table for discussion.
“With respect to Baha Mar’s developer, nothing has changed,” BMD Holdings said in a statement. “The developer has made proposals to China Ex-Im Bank and the other parties which would enable Baha Mar to be completed properly and opened successfully.
“We continue to be willing to work with all parties to achieve these goals as expeditiously as possible, and look forward to hearing back from the bank.”
Mr D’Aguilar, meanwhile, again suggested that the Government’s strategy of aligning with the Chinese to fight Mr Izmirlian’s preferred restructuring route, Chapter 11 bankruptcy protection, in favour of a provisional liquidation process through the Bahamian courts, had backfired.
Arguing that it had yet to result in Baha Mar’s swift completion and opening, Mr D’Aguilar said of the stalled Cable Beach project: “It’s turning into an enormous disaster.
“Whatever the Government promised by bringing the legal action to Nassau has not happened, and they’re left with this huge white dinosaur on their hands.”
Mr D’Aguilar argued that the Christie administration had likely listened too closely to China Construction America (CCA), Baha Mar’s contractor, and promises that it would quickly resume construction and complete the project if Mr Izmirlian was removed.
A construction resumption has yet to happen, with the China Export-Import Bank giving every sign that it will not invest a further cent into Baha Mar, and is only interested in recovering its $2.45 billion and ‘being made whole’.
“The bank seems to be very level-headed, cautious and not wanting to throw good money after bad,” Mr D’Aguilar told Tribune Business.
Prime Minister Perry Christie has frequently promised that “good news” on Baha Mar is imminent but, compared to these expectations, yesterday’s China Export-Import Bank statement can only be described as a ‘damp squib’ - both from the perspective of the Government and the Bahamian people.
Several observers privately suggested to Tribune Business that its statement was a ‘non-news’ press release, and interpreted it to mean that a deal to secure Baha Mar’s future completion and opening is still some distance away.
“We hereby solemnly state that China Ex-Im Bank has been actively working with relevant stakeholders to seek proper resolution of the issues that the project is facing, and has been maintaining close communication and contact with the Government of the Bahamas,” the bank’s statement said.
“Currently, there is a preliminary plan concerning the future arrangements and this will be launched as soon as practicable. The bank is working with the Government to prepare for the Convention Centre to be used for the IDB event in early April 2016.”
The statement continued: “In addition, our bank has been in contact with a number of potential investors and they have expressed initial interest in the project.
“The bank will continue to communicate with parties who have expressed initial interest in the project, and other parties who could potentially be interested in the project, as it seeks to formulate a comprehensive solution as soon as possible.”
The China Export-Import Bank’s comments indicate that any potential deal has yet to move beyond the ‘preliminary interest’ stage, and it would likely have given notice - in accordance with the Prime Minister’s wishes - if an agreement was imminent.
Meanwhile, Tribune Business sources - including some ex-Baha Mar employees - said yesterday that it would not require a huge expenditure to ready the convention centre for Inter-American Development Bank (IDB) Board of Governors meeting, as the facility was already largely complete.
However, this newspaper understands that it is currently being used as a warehouse to house all the construction materials, furniture and fixtures that had to be removed from containers and placed into new storage when Baha Mar filed for Chapter 11.
While all these materials will have to be taken out and re-stored, the biggest potential problem for the IDB meeting is that the Grand Hyatt will not be open. As a result, attendees will likely have to be bussed to the convention centre from the Melia or walk across deserted parking lots.
Meanwhile, Tribune Business sources familiar with the Baha Mar situation said last week’s resignation of Tom Dunlap, the project’s president, had sparked further departures among the remaining 350 staff.
They added that employs were also having to deploy numerous buckets to catch water leaking into the unfinished Baha Mar resorts as a result of recent heavy rain.
Raymond Winder, Deloitte & Touche (Bahamas) managing partner, said he was on another line and unable to talk when contacted by Tribune Business yesterday.
A Baha Mar solution may well be a long and complex process. The China Export-Import Bank’s desire to recover 100 per cent of its loan will not fit with Western investor groups, who will want it to ‘take a hair cut’ and be seeking a cut-price deal to acquire the project.
This, in turn, makes a Chinese investor group the likeliest Baha Mar purchaser, with the prospect that they will be repaid with favours and concessionary loans from the Beijing government and China Export-Import Bank, in return for making the latter whole.
This scenario does not make for the quick construction completion and opening desired by Mr Christie and his Government, and the window for doing so prior to a likely May 2017 general election is closing rapidly.
It is possible the Prime Minister wants to go to the country even sooner, but he cannot do so without Baha Mar.
One Tribune Business contact, speaking on condition of anonymity, suggested that Beijing’s anti-corruption drive might scare off potential Chinese buyers, too.
They added that the Prime Minister had been “hanging his hat” on a potential offer from Fosun, the privately-owned Chinese conglomerate that controls the Club Med resort chain, the Cirque du Soleil entertainment firm and a host of global property holdings.
However, the four-day disappearance of its chairman, Guo Guangchang, last week to assist an investigation by the Chinese authorities may have dampened enthusiasm for Baha Mar.
The source also pointed out that, as the price for rescuing Baha Mar, the Chinese may use their leverage to ensure all goods and supplies come from China - not local vendors in the Bahamas. And, they suggested, there may be more work permits for Chinese employees.
Comments
ThisIsOurs 9 years ago
The PM is caught between a rock and a hard place of the AG's making. The people want to know what's going on, and he wants to give them "good news", but in this case, no news is good until the deal is signed
ohdrap4 9 years ago
it is either a dinosaur or a white elephant, no such thing as a white dinosaur
Baha10 9 years ago
Things looking "dead" .... good?!?
tonymontana 9 years ago
things tend to turn white , when dead , so thus the white dinosaur .
JohnBuchanan 9 years ago
The PM was right about one thing -- Izmirlian is clearly mentally unhinged if he thinks the Chinese would under any circumstances resume any business relationship with him. The fact they ousted him seems to have escaped him.
Vesper 9 years ago
Actually, no. It's called "business". Izmirlian leaving whatever proposal he has open and on the table is rather responsible and quite fair. When the Chinese are done bending dear PM over for economic control of this country, and he finally realizes this (or decides to care), there can be no complaints about Izmirlian being uncooperative.
sealice 9 years ago
"white dinosaur" hey hey hey now watch it 7.4356% of the population takes offense....looks more like a Yellow dinosaur anyways and how come da lites still on?
Tarzan 9 years ago
All as easily predicted. Chapter 11 in U.S. court was only hope for this project. Liquidation was predictable disaster and time has run out. Assets, both physical and intangible, are rapidly degrading. In six months it will be a teardown. All for what? Perhaps to hide from public dealings between powerful persons in the Bahamas and the Chinese contractor and bank which U.S. Courts would have exposed? What other reason could there be? This liquidation strategy was doomed from the outset. All the promises made to find a new investor and to have the property open and running soon are risible.
Franklyn 9 years ago
Mr D’Aguilar should truly shut his trap ...he is purposely dishonest, out of the loop and playing with the Baha Mar issue in a destructive way. He has not once offered a remedy for paying Bahamian contractors, who the company that he is/was a board member, owe millions; and is only concern with his own interest.
Honestman 9 years ago
"This scenario does not make for the quick construction completion and opening desired by Mr Christie and his Government, and the window for doing so prior to a likely May 2017 general election is closing rapidly."
The "Beijing Palace" will not open in time to save Christie and the PLP. The government has screwed up royally here and is paying the price for its duplicity. Unfortunately, hard working Bahamians will also pay the price.
We are also going to suffer as, in a desperate attempt to save face, the PLP forces through an unworkable NHI scheme destroying a perfectly good Private Health Insurance Industry in the process. Civil Servants are now finally coming to realize that they are going to have to suffer a greatly reduced health care service once this scheme is implemented.
Thankfully, the PLP only has another 17 months left to abuse its power. Sadly, there "won't be much left on the carcass" once the vultures have had their way.
Franklyn 9 years ago
17 months! you know the damage these suckers can do in 17 months, I want them gone now! Bahamians need to fight for this country or we will not have a country with these sucks in power.
The PLP is a threat to the Bahamian people and they must go, now.
Honestman 9 years ago
Share your sentiments Franklyn but both you and I know, the PLP will cling onto power until the last moment. That's how they roll.
banker 9 years ago
Baha Mar is truly finished now. Even the bottom feeders looking to acquire it cheaply -- pennies on the dollar aren't serious and are offering a mere pittance in hopes of gaining something for nothing. Respectable developers know the risk of dealing with the PLP and the Chinese. Unfortunately the PLP likes play ball and crotch-sniff with the bottom feeders.
islandlad 9 years ago
I want to briefly comment on the IDB conference. This is a worldwide high profile group, will this bubble gum and band aid approach to pulling this off really put the Bahamas in the best light? This event was literally pushed through by the Gov't and promised/quoted an RFP and accepted without support of the Hospitality community. Baha Mar and Atlantis etc, were basically told after the fact and no contracts signed with the hotels, then it became a "Take one for the Team" and do the Gov't a favor to save face......strictly from a hoteliers point a view, this was not a good piece of business and hotels would have turned it down if the opportunity had come straight to them. The Gov't should have come clean the second bankruptcy was declared, or at least after the liquidation was official and cancel the conference in the Bahamas and give them time to find another location.
That being said, Baha Mar doesn't exist and China Exim bank doesn’t own the Melia. Last I checked, the Bank isn't an operator, who is going to "Work" the event? Is the Bank going to sub-contract out to other Hospitality vendors to run the event....Oye Vey.....and what Vendor Contractor in their right mind would take this work knowing the history of not getting paid?
GrassRoot 9 years ago
no one is touching this not until the law suits in London are done with.
GrassRoot 9 years ago
would be funny if an Izmirlian led consortium would buy the thing back for cents on the dollar.
John 9 years ago
A GREATER PROBLEM THAN BAH MAR is the fact that after some two years of record low prices for oil on the world market, Bahamian businesses and consumers alike are paying out their ears for fuel and electricity. Both fuel and power costs in the Bahamas should be at least 40% lower than what they currently are, cooking gas included. But our care less governments has allowed a small sector to reap windfall profits on fuel and has put the cost of living in the Bahamas outrageously dangerously high and has forced thousands to live below the poverty line...a scoop of icecream costs almost $5.00 damnit! If businesses were allowed to realize the reduction in fuel costs, as the world markets dictate, not only could these businesses reduce prices and pass savings on to consumers but also re-tool their businesses and even expand them as well. A scoop of icecream should not cost $5.00 damnit! If consumers get lower utility bills and a corresponding decrease in the cost of consumer goods, they will have greater purchasing power. So they spend more and the economy grows. It would not be in its current state where hundreds of businesses are going under each year. When the economy grows government collects more taxes. Because the government realizes more revenue deficit spending decreases and so does the growing,out/of/control, national debt. Everybody wins, including flowers. Flower shops that is. Bet on it! But because your. (Did I say 'your') government,for whatever reasons, including lousiness or corruption, has allowed a sector of the economy to hoard huge profits on decreased fuel, Bahamians, those who still can afford to, are still paying $5.00 for a scoop of icecream, then VAT is added damnit!
John 9 years ago
Maybe it's time to start boycotting BEC and the gas stations and the cooking gas companies until they bring their prices down. Not in a hostile way. But by driving less, cutting back on electricity usuage as much as possible, and even utilizing alternative sources of power as much as possible until they bring their prices down. HEAR THIS: A city in Texas recently refitted its power company to use alternate forms of fuel, including wind, solar and hydro electricity. Now not only do they have the lowest power rates in the US but all power consumed between 10 p.m and 6 a.m. Is FREE! The city Iis Dallas, Texas and they now generate more power than they can utilize using mostly wind. We have the same conditions here that can make at least most of the family islands totally wind and solar powered.
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