The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister was yesterday said to have performed a “180 degree u-turn” in his relationship with Sarkis Izmirlian, amid calls for him to “flex his muscles” in support of the original developer’s latest Baha Mar proposal.

Dionisio D’Aguilar, a former Baha Mar director and friend of Mr Izmirlian, said the $3.5 billion project’s creator was now “screaming from the mountain tops” for Government assistance in engaging with the China Export-Import Bank.

Baha Mar’s financier, and secured $2.45 billion creditor, has effectively ‘cold shouldered’ Mr Izmirlian since the project was placed in joint provisional liquidation, refusing to entertain any proposals he has submitted to get the development back on track.

The Government displayed a similar attitude, but last Friday’s meeting between Mr Izmirlian and Perry Christie appears to have at least started to thaw a ‘frozen’ relationship previously placed in cold storage.

The meeting appears to have been positive enough for Mr Izmirlian and his team to ‘go public’ with a revised offer to the China Export-Import Bank, in which he pledges to make both it and Baha Mar’s Bahamian creditors - collectively owed tens of millions of dollars - whole.

Tribune Business sources close to developments confirmed that it was Mr Christie who reached out to Mr Izmirlian via intermediaries, amid growing frustration on his - and the Government’s part - about the seeming lack of progress made by the Chinese in resolving the Baha Mar impasse.

This newspaper was told that Mr Izmirlian was “reluctant” to call the Prime Minister, given that their fractured relationship had hit a low point last year.

However, he eventually arranged a meeting where sources variously described the Prime Minister as “non-committal” but seemingly keen to start rebuilding his relationship with Mr Izmirlian - the man whom he backed to deliver his vision for rebuilding Cable Beach some 13 years ago.

“Christie has had to rotate 180 degrees because the Government has not seen enough forward progress on their [the Chinese] part,” one source familiar with the Friday encounter said.

“The Prime Minister was quite sociable, which he [Sarkis] thought was a start, given where we were a few months ago. There’s definitely a warming.”

Tribune Business understands that the Prime Minister, and his administration, are growing increasingly frustrated by the Chinese failure to deliver on their promises, namely a swift opening of Baha Mar, and are starting to feel they may have backed the wrong side in last year’s ‘Chapter 11’ battle.

Reaching out to Mr Izmirlian would have been unthinkable several months ago, and the developer was complaining as recently as February 2016 that his efforts to reach out to the Government and Prime Minister were not receiving any response.

The biggest step taken to-date by the China Export-Import Bank and its Deloitte & Touche receivership team is to launch a formal sales process to sell the Baha Mar project, with Canadian-headquartered Colliers International hired to market the project to potential purchasers.

Tribune Business understands that the receivers have been expecting Mr Izmirlian to submit an offer via the formal process, but none had been submitted as of Friday.

Mr Izmirlian’s letter yesterday to the China Export-Import Bank’s president, Mr Liu, almost appears as an ‘end run’ around the formal sales process, something of which he was quite critical.

Cutting out the receivers by going to the China Export-Import Bank directly, Mr Izmirlian wrote: “Many have already commented that the sale process for Baha Mar launched by the receivers is opaque, fraught with obstacles and irregularities, and is not designed to maximise value for all.

“Rather, there is great concern that serious and experienced bidders are being driven away by the process. I don’t believe that is the goal, nor the moral standard, that you have established for the bank, and therefore offer again for my team to meet with you.”

Tribune Business revealed previously how bidders were barred from speaking to Mr Izmirlian and his executive team, plus Baha Mar’s former contractor, by the receivers - unless they granted them permission.

The Deloitte & Touche team subsequently issued a brusque rebuttal to the concerns expressed over this clause in the Baha Mar ‘non-disclosure agreement’ that all buyers are being asked to sign.

Mr Izmirlian’s letter did not go into the specifics of his offer, other than to pledge that the China Export-Import Bank “would not be required to take a discount or ‘haircut’” on the $2.45 billion debt owed to it.

It also “ensures payments to unsecured creditors, including those many suffering in the Bahamas”. However, it is difficult to judge the substance of Mr Izmirlian’s offer, and whether it will meet the China Export-Import Bank’s requirements, in the absence of more details.

Indeed, the letter hints that it is similar to a January 2016 offer, which the bank has to-date ignored, and not engaged or negotiated with Mr Izmirlian on.

Describing the meeting with the Prime Minister as “encouraging”, Mr D’Aguilar argued that Mr Izmirlian remained “best suited” to completing and opening Baha Mar faster than any other developer.

“Hopefully, Sarkis articulated and showed why his plan was better for Bahamians, better for the country, than the Chinese, who are clearly in no rush to do anything,” Mr D’Aguilar told Tribune Business.

“The Chinese have demonstrated that they’re not prepared to finish this project, and instead want to flog it for 100 cents on the dollar and are willing to wait for that, with no regard for the welfare of the country.

“In nine to 10 months there has been little to no movement on this,” he added. “Sarkis has his heart and soul in this. He lives here and the Chinese don’t.

“He loves the Bahamas so much that he decided to make it his home and raise a family here. That’s the type of investor you want in your country.

“I truly believe he is the best equipped, best suited, most passionate person to finish this project. It’s in the best interests of this country to get him back in control and get this project running again.”

By largely keeping Baha Mar’s executive management team together with him, Mr Izmirlian has a precious advantage over any other developer/buyer when it comes to completing the project in the shortest possible timeframe

Apart from their knowledge of its construction status, they also possess details of all existing commercial arrangements, including the contracts with hotel brands, retail and restaurant tenants, vendors and others.

Mr D’Aguilar said Friday’s meeting indicated that the Prime Minister “recognised” the Chinese were failing to deliver a timely resolution, which apart from being much-needed by the economy and society, also has political implications with an election upcoming.

While the relationship between the two parties had not been fully rebuilt, Mr D’Aguilar said Mr Izmirlian was now seeking the Government’s help with the China Export-Import Bank to “make the deal work”.

“He’s been making overtures to them, and they’ve not come back to him,” he added of the bank. “Who’s got most to lose? The Commonwealth of the Bahamas. Mr Christie needs to flex his muscles as leader of a sovereign nation in which is located a project that is in the national interest to get it up and running.

“He needs to convince the Chinese of that and to make that happen, because if he doesn’t there’s an impact that rollercoaster and reverberates through this economy.”

Calling on the Government to “jump at” Mr Izmirlian’s latest offer, Mr D’Aguilar said the China Export-Import Bank needed to cut the project’s main contractor loose, and “send it up to Bay Street” to finish The Pointe instead.

He described the China Export-Import Bank’s refusal to engage with Mr Izmirlian as “frustrating”, and said the original developer needed to “keep the pressure on” both it and the Government.

Mr Izmirlian, in his letter to the China Export-Import Bank, promised to “invest the further funds necessary to open Baha Mar”.

“With our offer, there is no reason to allow the property to continue to linger, to become further distressed, to incur further lay-offs of capable team members needed to open Baha Mar, and to delay the re-employment of so many well trained Bahamians,” Mr Izmirlian said.

“Without a doubt my team and I have the best chance of opening Baha Mar quickly and successfully for the benefit of the Bahamian people, Ex-Im Bank and the stakeholders of Baha Mar.

“I have maintained since last year the former senior most management team of Baha Mar at a significant cost, and we are unequivocally committed to making an opened Baha Mar a truly Bahamian-driven business success for the direct benefit of Bahamians both economically and in terms of quality of life.”

Adding that “time is of the essence” when it came to paying Bahamian creditors and getting the 2,000 laid off staff back to work, Mr Izmirlian argued that no one could re-open Baha Mar faster than himself and his team.