The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sarkis Izmirlian and his fellow directors resigned from Baha Mar’s Board last week, with one last night expressing scepticism over the Prime Minister’s assurances that all Bahamian contractors and creditors will be ‘made whole’.

Dionisio D’Aguilar told Tribune Business that after effectively being sidelined by the Supreme Court-appointed joint provisional liquidators, and then the Deloitte & Touche receivers, he and the other directors had no role to play.

“Everybody resigned at the end of last week,” he said of himself and his fellow Baha Mar directors, who included Mr Izmirlian and his father, Dikran.

“You have all the liquidators and those people who have taken control of the company, so there is no need for us any more.

“We were directors of a company owned by Sarkis Izmirlian, and he no longer runs it, so it’s only fitting that we step aside. We don’t meet any more; we don’t talk, and Sarkis is not involved in the property since it’s been in the hands of the liquidators, so there’s nothing else for us to do.”

The $3.5 billion Baha Mar project’s fate is now resting solely in the hands of the China Export-Import Bank, the project’s secured creditor and $2.45 billion lender, and the agreement it will likely strike eventually with a new owner or operator.

Mr D’Aguilar said the bank’s aim would be to recover as much of its loan as possible, as he expressed scepticism about whether Prime Minister Perry Christie could persuade it to pay Baha Mar’s Bahamian creditors 100 per cent of what they are owed.

“To add insult to injury, Bahamian contractors and creditors are now waiting on what the bank is going to do,” Mr D’Aguilar told Tribune Business.

“Mr Christie says he’s going to make sure he pays them off. I don’t believe that. You can’t make them.”

Bahamian contractors are collectively owed more than $74 million for work performed on Baha Mar, and have warned of dire consequences for the local construction industry if due sums are paid soon.

Hundreds of Bahamian vendors and other suppliers are, for them, owed significant sums by the project, and all are counting on the China Export-Import Bank - which has effectively taken over ownership of the bank - to fully compensate them.

While the Government does have leverage over the Chinese bank, given that the deal with its new Baha Mar ‘partner’ will require the necessary investment-related approvals, it remains to be seen whether the Christie administration would want to incur the displeasure of the Beijing government.

“I still cannot for the life of me understand why this is the better option,” Mr D’Aguilar told Tribune Business, comparing Baha Mar’s receivership to the Chapter 11 restructuring process that was successfully defeated by the China Export-Import Bank and China Construction America (CCA).

“Despite just as much hype as the Government wants to put on this having a speedy outcome, at the end of the day, the project is beholden to the whim of the bank.

“And you cannot tell me that a Chinese bank is more forgiving than Mr Izmirlian was. No Chinese bank is going to do a Leadership Development Institute (LDI), no Chinese bank is going to invest in Bahamian art and create opportunities for Bahamian artists.

“No Chinese bank is going to love this project as much as the person whose brainchild it was,” Mr D’Aguilar added.

“I’m at a loss, and would love Perry Christie and his band of merry men to explain to me and the Bahamian people why this was a better outcome than the one proposed - Chapter 11.”

Mr D’Aguilar added that none of the Government’s promises - made when it announced plans for the provisional liquidation move - have come to fruition.

These included pledges that Baha Mar would be open by Christmas if this route was taken, and that the project’s completion would be speeded up if its fate was placed in the hands of the Bahamian, rather than the Delaware, courts.

“We are swimming in the wilderness, and are beholden to a Chinese bank,” Mr D’Aguilar told Tribune Business.

“It’s a very unfortunate situation. Everybody is finding out what we already knew: That dealing with a Chinese bank that is state-owned, government-controlled, is not an easy undertaking. They’re slow decision-makers, and are not motivated by what traditional banks are motivated by.

“This is not a happy ending; it’s a fiasco. It’s not as if an interested person couldn’t figure it out. Once you get elected to office, somehow you become a genius on business problems.”

Tribune Business sources familiar with the present Baha Mar situation yesterday said that while numerous investor and hotel groups were showing interest in the $3.5 billion development, none had struck a deal with the China Export-Import Bank.

Speaking on condition of anonymity, they predicted that the China Export-Import Bank had two options over Baha Mar - reach an agreement with an operator/manager to complete the project and run it, or sell it to a buyer.

The source predicted that due to the $2.45 billion debt load, and likely near $1 billion investment required to complete and open Baha Mar, most Western hotel groups and buyers would be deterred from purchasing.

As a result, they forecast that the only buyer interest would come from Chinese investor groups and companies who, in return for making the bank ‘whole’, could be repaid with concessionary loans at low interest rates back home in China.

“Another Chinese group is in town this week to look at the property,” the source said. Tribune Business also previously reported that a Chinese group had partnered with MGM in a bid for Baha Mar.

“There are a number of people looking around,” the source confirmed. “The receivers are figuring out what the options will be with the property. There’s certainly keen interest from a number of parties. A lot of people are looking at it and showing interest.”

While this partially backs up Prime Minister Perry Christie’s public statements, the source seemed less optimistic that the China Export-Import Bank will reach a deal imminently.

Raymond Winder, one of the Baha Mar receivers, yesterday confirmed that they were still receiving expressions of interest over the property.

“People are coming in,” the Deloitte & Touche managing partner told Tribune Business. “That process is just ongoing. We’re basically assessing all our options.”