The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sir Sol Kerzner and his partners are competing with multiple rival bids to take over Baha Mar, with the Christie administration hoping a solution to take the stalled $3.5 billion project forward can be determined by year’s end.

High-level government officials, speaking to Tribune Business on condition of anonymity, said Sir Sol and his partner, Island Capital Group principal Andrew Farkas, were “one of” several groups talking to the China Export-Import Bank.

“There are a number of parties, and they’re one of them,” one sensitively-placed government official said of Sir Sol and Mr Farkas.

“They’re not the only ones. They’re still negotiating. I don’t think there’s a done deal. I’m sure that given something like this you’re going to have multiple people.”

Baha Mar’s original developer, Sarkis Izmirlian, and his BMD Holdings vehicle, yesterday declined to comment on Sir Sol’s involvement with its former Chinese partners, other than to say it remained the project’s “sole owner”.

“Given that there has been from the outset significant rumours, speculation and misinformation about Baha Mar, the developer, therefore, does not comment on inquiries of this type, and further notes that the developer is the sole owner of Baha Mar,” a spokesman for Mr Izmirlian and BMD Holdings said.

Sir Sol and Mr Farkas are negotiating to take over Baha Mar’s construction, financing and overseeing its physical completion and opening, and will then operate the property on behalf of the China Export-Import Bank.

The bank, which has effectively taken over control of Baha Mar’s assets and displaced its original developer, Mr Izmirlian, as the owner, currently has $2.45 billion in debt financing secured on the project’s real estate and resort properties.

With the Prime Minister suggesting that another $600 million is needed to complete Baha Mar’s, and no other lender wanting to find itself behind China Export-Import Bank in the creditor queue, it is highly likely that the latter will end up financing - at least in part - the project’s remaining construction.

That could take its total involvement into the $3 billion range, and the Government official told Tribune Business yesterday that Baha Mar’s debt load would prove a turn-off to potential purchasers.

Acknowledging that the search for management/operating partners “would be the game” at present, the official added: “With that debt level, it’s difficult to attract any equity investor.”

They said it was currently impossible to say when, and who, would bring the $3.5 billion project to fruition, although the Government is hoping the Chinese can seal a deal with someone before the New Year.

“This thing has a life of its own. It’s difficult to say when and who, given where it is now,” the official added.

“This has been long outstanding and has got to be resolved. We’re hoping that by the end of the year we will see some resolution.”

Tribune Business understands that some groups have met with Deloitte & Touche, the China Export-Import Bank’s receivers for Baha Mar, most interested parties have headed to Beijing to deal with the bank directly.

This newspaper was told that “everything is still moving”, and that the negotiations surrounding the best solution to take Baha Mar forward are extremely fluid, with numerous parties and proposals involved.

Sir Sol, though, brings numerous benefits to any potential Baha Mar bidder due to his proven track record - both in the Bahamas and as an investor/hotel developer of mega resort destinations worldwide.

His knowledge and understanding of the Bahamas and its culture, and how to successfully operate a profitable mega resort destination, and his expertise in running developments similar to Baha Mar, will likely be very attractive to the China Export-Import Bank.

And to the Bahamian Government, which has a long-standing relationship with Sir Sol (both parties) and regards him as a known and proven commodity with which it is accustomed to doing business.

Gowon Bowe, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, told Tribune Business that any group featuring Sir Sol would be “a front runner” to take over Baha Mar provided it could agree an acceptable deal with the China Export-Import Bank.

Emphasising that it was vital “to identify the best” Baha Mar solution for the benefit of the wider Bahamas, Mr Bowe said of Sir Sol: “He’s a known commodity.

“He comes from a construction background. From that perspective, he has a strong knowledge of what would have to transpire in terms of completing it form a construction perspective.”

Mr Bowe added: “Certainly, in terms of having the complete package, an understanding of hotel operations and what it takes to be successful, he [Sir Sol] certainly can’t be looked away from when considering any prospective bid by him for that property out west.

“He has all the skill sets and a proven track record. He’s certainly proven to be successful in the Bahamas, and understands marketing the brand and marketing the Bahamas.

“He’s certainly a strong contender in terms of making a bid for Baha Mar, and getting it complete and making it successful. He’s certainly a front runner if he’s able to come to terms with the China Export-Import Bank.”

Mr Bowe said Sir Sol still likely possessed the international connections to assemble a management team capable of running a mixed-use resort, featuring casino, hotel and theme park-type operations.

He added that the former Atlantis and Kerzner International owner would also have a “head start” over rival bidders Baha Mar bidders when it came to going through the Government’s approval and due diligence processes, because it already knew him.

Sir Sol’s partnership with Mr Farkas will likely see the latter put up the necessary financing, with the South African providing the necessary operational and resort expertise.

Should their offer be successful, it will likely represent a ‘last hurrah’ for Sir Sol, who will likely embrace what could be his last opportunity to run a mega resort destination.

It would also be something of ‘a rise from the ashes’ for Sir Sol. Despite reviving and rescuing Bahamian tourism in the 1990s, and placing this nation on the map again via Atlantis, he and Kerzner International were forced to relinquish ownership of that property - and the One & Only Ocean Club - in 2012.

That came after the $2.4 billion debt load, taken on to finance the Atlantis Phase III expansion and the resort brand’s international expansion, proved unsustainable in the aftermath of the global recession - forcing the properties’ sale to Brookfield Asset Management via a debt-for-equity swap.

Sir Sol also subsequently sold his family’s Kerzner International interests to Dubai in 2014, freeing him up to concentrate on other interests.

Mr Farkas, who owns Island Global Capital, a private merchant bank focused on the real estate sector, has also suffered previous setbacks in the Bahamas.

His subsidiary, Island Global Yachting (IGY), in the mid-2000s partnered with the then-British Colonial Hilton’s owners on the sort of marina and related real estate development now being undertaken on the very same site by China Construction America (CCA), the resort’s new owner.

However, the IGY project was stymied after it claimed that a new owner, which bought into the British Colonial Hilton after talks were underway, attempted to alter the terms of the deal. The affair resulted in much acrimony and litigation in New York, which was ultimately settled out-of-court.

Mr Farkas and Island Global Capital were also appointed by CCA as their ‘restructuring agent’ on the Baha Mar project, following its descent into Chapter 11 bankruptcy.

This likely gives Mr Farkas and Sir Sol an ‘inside track’ on their negotiations with the China Export-Import Bank. And possibly means that CCA will be retained as the contractor to complete Baha Mar.