The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister’s renewed enthusiasm for Sarkis Izmirlian shows he now realises that the Government “backed the wrong horse” in the Baha Mar dispute, the Democratic National Alliance’s (DNA) leader charged yesterday.

Branville McCartney told Tribune Business that the Christie administration now needed to “undo” the damage caused by its winding-up petition and “exert pressure” on the Chinese to accept Mr Izmirlian’s latest offer, provided it is “reasonable”.

Agreeing that Mr Izmirlian and his senior executives were better-placed than any other investor to complete Baha Mar, and open it, in the shortest possible timeframe, Mr McCartney said the thawing of relations between the developer and Prime Minister showed the Government recognised it had made a mistake.

“The Government backed the wrong horse on this one and he’s realised that. No doubt about that,” Mr McCartney told Tribune Business of Mr Christie, adding that last year’s dispute should never have resulted in his administration seeking to wind-up Baha Mar.

He added that Mr Christie was likely reaching out to Mr Izmirlian, and seeking to ‘mend fences’, because he had realised that with an election due in just over a year, Baha Mar’s original developer was the only person who stood a chance of completing and opening the project by then.

Tribune Business reported earlier this week how Mr Christie’s meeting with Mr Izmirlian last Friday, the first time the two have come together in several months, effectively represented a “180 degree u-turn” in the Government’s attitude to Baha Mar’s original developer.

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 was followed by further warm comments by Mr Christie on Monday night, when he said Mr Izmirlian’s latest purchase offer was “deserving of every consideration”, and that he had written to the China Export-Import Bank expressing the same sentiments.

Whether the Prime Minister’s comments will make any impression on Baha Mar’s lender and secured creditor, which now has control of the $3.5 billion development, is uncertain, given that he has been unsuccessful to-date in persuading the Chinese to speed up the project’s sale.

Still, Mr McCartney said of the Prime Minister’s actions: “This is what should have happened prior to the project being wound-up.

“I would have sat down with all parties in my office and ensured we have a resolution to this project, development before that happened. It should never have got to that [winding-up] stage.”

Many observers last year believed the Government effectively colluded with the Chinese to remove Mr Izmirlian from ownership of Baha Mar.

After the Chinese successfully ensured the dismissal of his Chapter 11 bankruptcy petition in the Delaware courts, the Government and its agencies - the likes of the Gaming Board and National Insurance Board - then moved in with a Supreme Court petition to wind-up Baha Mar.

That resulted in the appointment of joint provisional liquidators and the removal of Mr Izmirlian. The former were then sidelined by the China Export-Import Bank, who moved in with their Deloitte & Touche receivership team to take control.

Mr McCartney told Tribune Business that the Government had “put Izmirlian and Baha Mar out of business”, and had then taken seven months to realise it was pursuing a misguided strategy.

“The Government put in a winding-up application, which means in layman’s terms that you’re bringing that project to an end,” the DNA leader said. “That was something the Government should never have done.

“I think the Government, by them doing that, it shows they were misguided in their approach and how they dealt with the developer, Sarkis Izmirlian. It certainly got out of hand.”

Mr McCartney’s comments refer to the public spat that occurred between Mr Izmirlian on one side, and the Prime Minister and his administration on the other, following the Chapter 11 filing and subsequent multiple legal disputes.

There were even suggestions from some Cabinet ministers that Mr Izmirlian had become unhinged and had lost his sanity, a far cry from the warm overtures being made to the developer now.

“The Government should have done all that was necessary to make that project work, short of winding it up,” Mr McCartney reiterated.

“By going down that road, you’re telling the developer: ‘We’re going to put you out of business’. That’s what they did last year; they put Izmirlian and Baha Mar out of business.”

Now, following the Government’s seeming reversal over Baha Mar, the DNA leader added: “The fact they’re talking now, hopefully there will be some resolution to this matter.

“It would be good, I think, if Sarkis was back in the door and is the one to complete that project. That would be good, and I think the Government ought to do everything possible to make that happen and undo what they did over all those months to make that happen. They were the ones that put Baha Mar out of business.”

Mr Izmirlian has revealed few details about his revised offer to the China Export-Import Bank, other than it proposed to make it and all other creditors - including Bahamian contractors, vendors and former staff - whole.

It is based on his January offer, which proposed that he and the China Export-Import Bank each finance 50 per cent of the amount needed to complete Baha Mar’s construction and open it.

The last public estimate of how much this would cost came from the Prime Minister, at $600 million. Add in pre-opening and marketing expenses, and both parties would each likely have to invest close to $500 million if they can work out a deal.

A major stumbling block, though, is likely to be Mr Izmirlian’s insistence that China Construction America (CCA) be dumped as the project’s main contractor. This is unlikely to be accepted by the China Export-Import Bank, not least because the two companies enjoy common ownership in the form of the Beijing government.

It would also be something of a humiliation for the Chinese to have to go back to Mr Izmirlian, given that they have worked so hard to remove him.

“If his proposal is a good one, the Chinese ought to accept it. If they don’t, it tells us that they have an ulterior motive,” Mr McCartney told Tribune Business. “If it was reasonable, I’d have thought they’d jump at a person taking over that property.”

The DNA leader acknowledged that the Government had relinquished all control at Baha Mar, but it still had “very significant” influence that it can bring to bear to encourage a resolution.

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 latest offer to the China Export-Import Bank almost appears as an ‘end run’ around the formal sales process, cutting out the receivers. It remains to be seen whether this endears him to the bank and/or the receivers.