The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The $3.5 billion Baha Mar project will not open in time to catch the peak winter 2015 tourism season if it is placed under the control of provisional liquidators, a senior private executive warned yesterday.

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, told Tribune Business that three-four months was simply not enough time for the provisional liquidators - if appointed - to “go through the rubble” and organise the property’s construction completion.

Speaking ahead of today’s Supreme Court hearing on the Government’s petition to wind-up Baha Mar over an alleged $59 million debt, Mr Sumner said the move would benefit no one.

“No one wants to see this go through a winding-up petition, a provisional liquidation. It benefits no one,” Mr Sumner told Tribune Business.

“The process of having that person coming in to take over that property is not going to happen in a few short months. The expectation that this property will open in time for the winter season with the provisional liquidators running the operations is unrealistic.

“That will not happen when you appoint provisional liquidators to take over someone’s property.”

Mr Sumner explained that if the PricewaterhouseCoopers (PwC) team, headed by Prince Rahming and Gowon Bowe, were appointed to control the 14 Bahamian-domiciled Baha Mar companies, they faced “a significant amount of work” to simply get a handle on the development and all its partnerships/relationships.

He added that it would take the PwC team “months to go through the rubble” if and when it took over at Baha Mar.

And the necessary information exchanges between Baha Mar’s principal, Sarkis Izmirlian, and his management team and the provisional liquidators would “not be easy, will be very intrusive, and are not a pleasant experience”.

There is also the possibility that much of the ‘key knowledge’ held by senior Baha Mar management may have fled the jurisdiction if the PwC team is appointed, due to the Government’s failure to pay the July salaries of expatriate employees.

Mr Sumner’s position is similar to that taken by Mr Izmirlian in his letter to the China Export-Import Bank chairman last week, in which he warned that the appointment of a provisional liquidator will “make it impossible” to immediately open and operate a completed Baha Mar, since it will jeopardise key hotel and retail/restaurant tenant relationships.

He warned that apart from endangering Baha Mar’s key business relationships, the appointment of provisional liquidators may also cost the development millions of dollars in lost residential condominium sales.

“The proposed solution by the Government of the Bahamas of a provisional liquidator is not the best solution for the resort, or the bank,” Mr Izmirlian wrote.

“This is an extremely complex project with multiple management contracts with major international hotel brands (which owe $52 million in ‘key money’ to the project), multiple leases with retailers, restaurant operators, residential condominium sales, casino operations and so forth.

“Appointing a liquidator at this point is likely to substantially negatively impact or lead to the extinguishment of those relationships, will lead to management upheaval, and will make it impossible to operate the resort in a short timeframe, even if completed.”

Mr Sumner, meanwhile, told Tribune Business that the $3.5 billion Baha Mar project was “still salvageable”, but warned that the Bahamas’ reputation in international investor circles would depend heavily on how the dispute was handled and resolved.

He added that all four parties - Baha Mar and Mr Izmirlian; the China Export-Import Bank; China Construction America; and the Government had to take responsibility for the current plight of Baha Mar’s 2,400 staff, Bahamian contractors, small and medium-sized enterprises and the project’s retail/restaurant tenants.

Mr Summer said the four were “all responsible for any fall-off in international investor sentiment, although I don’t think it’s had a big initial impact.

“The sentiment will be based on how the Government and developer behave over the next several weeks, and how they deal with, manage and resolve this issue,” he told Tribune Business.

“The situation with Baha Mar is still salvageable if it can be resolved. The reputation of the Bahamas is not jeopardised yet, but it’s incumbent on how we deal with this matter. That will determine the level of investor sentiment going forward.”