The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s negotiating team yesterday remained in Beijing for a third day of talks with its Chinese partners in a bid to resolve the impasse over the $3.5 billion project, even though the Government’s representatives departed on schedule.

Tribune Business sources familiar with the talks’ progress confirmed that the Government team, headed by attorney general Allyson Maynard-Gibson, left to return to the Bahamas following two days of discussions.

However, it was also confirmed to this newspaper that Baha Mar’s representatives remained behind for a third day of negotiations with its debt financier, the China Export-Import Bank, and China Construction America, its contractor.

While the key Baha Mar stakeholders remain locked in talks, there was no sign of a breakthrough or agreement before press time last night on how to complete the $3.5 billion project’s construction and get it open.

As a result, several Bahamian private sector executives yesterday compared the Baha Mar negotiations to both the marathon talks on Iran’s nuclear programme and discussions over how to rescue Greece’s economy and prevent its exit from the Eurozone and European single currency.

Both those negotiations appeared to result in some kind of agreement, and in the context of the Bahamian economy and its people, the Baha Mar discussions are equally as important as the Iran and Greece talks.

While it is difficult to discern whether Baha Mar and its Chinese partners are making any substantial progress in resolving their differences, the fact they are at least still talking can be interpreted as a mildly positive sign.

Especially since they now have just four days to hammer out an agreement before they are due back in the Supreme Court and Delaware Bankruptcy Court on July 20 - a date when the developer has indicated it will make decisions on staff lay-offs.

Branville McCartney, the Democratic National Alliance’s (DNA) leader, yesterday told Tribune Business that it would likely “prove very, very difficult for a reasonable settlement” to be achieved over Baha Mar.

He based his assessment on the fact that the developer, Sarkis Izmirlian and his Lyford Cay-based family, was getting at least a double - and potentially a triple - dose of the Chinese government in talks on the latter’s home turf.

Mr McCartney also pointed to the depth of the breakdown between Baha Mar and China Construction America as a gap that will be difficult to bridge, given that the developer’s claims of “shoddy workmanship” were effectively a reflection on the latter’s owner - the Beijing government itself.

“It’s going to be very difficult,” he said of the prospects for a negotiated settlement, “for there to be fair negotiations, especially if the main concern stems from the fact the developer is saying the construction company, which is owned by the Chinese government, did shoddy work,” the DNA leader told Tribune Business.

“It’s probably going to prove very, very difficult for a reasonable settlement unless they’re [the contractor] willing to admit to that. That’s a reflection on the Chinese government itself.”

Mr McCartney said the relationship between Baha Mar and China Construction America, in particular, would prove a “challenge” to mend given the tone of court filings and the invective that has passed between the two sides publicly.

Documents filed by Baha Mar with the Delaware Bankruptcy Court to support its Chapter 11 filing strongly suggest that it wants to dump China Construction America as the project’s main contractor, especially if it can get the Supreme Court in the Bahamas to recognise the US court proceedings.

And Mr McCartney said Baha Mar was being confronted by at least two Chinese government entities - in the shape of the bank and the contractor - and possibly three, given that direct representatives of the Beijing government were also likely to be present at the talks.

“The negotiations are a bit uneven,” he added. “You have the developer against the Chinese times’ two, and possibly times’ three - the government, the Chinese bank and the Chinese construction company.”

Meanwhile, Stuart Cove’s was among three more Bahamian creditors who filed claims against Baha Mar in the Chapter 11 proceedings in Delaware.

Nassau Undersea Adventures, doing business as Watersports by Stuart Cove’s, submitted a $75,720 claim against Baha Mar Properties.

And Sinewave Electrical filed a $90,320 claim against Baha Mar Properties, while Distinctive Promotional Products and Monique Evans-Cambridge said they were owed $81,241.

They bring the total number of Bahamian companies who have submitted claims in the Baha Mar Chapter 11 process to seven.

Together with John’s Department Store, Pureti Bahamas, DHP Associates and Executive Coffee & Foods, yesterday’s three claims take the total filings against Baha Mar to-date to a collective $501,468.

That works out to an average $71,638 per firm, and again illustrates the impact Baha Mar’s woes are having on small and medium-sized Bahamian businesses.

Tribune Business revealed yesterday how the China Export-Import Bank was willing to provide Baha Mar with $100 million in additional working capital to fund its initial operation, on top of the previous $300 million proposal to complete the project’s construction.

Sources familiar with the progress of negotiations in China said the proposed settlement ‘framework’ was similar to what had been offered prior to Baha Mar’s Chapter 11 bankruptcy protection filing.

That would have pegged the cost of completing Baha Mar’s construction at $300 million, subject to verification by a quantity surveyor.

Once that sum was confirmed, China Export-Import Bank, Baha Mar’s main debt financier, would provide $150 million or 50 per cent of the necessary financing.

The $150 million balance would then have been split equally between Baha Mar’s principals, the Izmirlian family, and China Construction America.

While each would have kicked in $75 million, the deal required Sarkis Izmirlian, Baha Mar’s chairman and chief executive, to also provide a personal guarantee - something he baulked at doing prior to June 29’s Chapter 11 filing.