The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The China Export-Import Bank is releasing “about $100 million” to pay out Baha Mar’s Bahamian creditors, Tribune Business was told yesterday, amid continuing distrust over the deal struck by the Christie administration.

K P Turnquest, the Opposition’s deputy leader, said lack of trust was the fundamental problem that continues to plague the Government over its agreement with the China Export-Import Bank to complete Baha Mar’s construction.

He added that whenever Prime Minister Perry Christie had asked the Bahamian people to trust himself and his government previously, he had been “found a little wanting”.

However, sources familiar with the structure, and process, put in place for compensating Bahamian contractors, suppliers and former Baha Mar staff yesterday confirmed more details of what local creditors can expect to receive.

Speaking on condition of anonymity, one contact said Leslie Miller, the PLP MP for Tall Pines, had “got it half right” with his assertion that all Baha Mar creditors owed $500,000 or less will be ‘made whole’.

However, his claim that all those owed more than $500,000 would receive 50 per cent of what was due was described as being “on the low side”.

James Smith, former minister of state for finance, and who is a government representative on the five-strong committee that will oversee Baha Mar creditor payouts, declined to comment when contacted by Tribune Business yesterday.

This newspaper, though, was told that much of the ‘groundwork’ had been performed by Baha Mar’s Deloitte & Touche receivers, and before them the provisional liquidators, as they had already supplied the Supreme Court with a list of creditors and sums claimed.

The Baha Mar creditor payout committee will now be able to use this list as the basis for adjudicating, and settling, claims that will include the $74 million collectively owed to Bahamian contractors.

The committee is likely to make one final call for creditors to step forward, and provide proof of their claims, to ensure no one is missed out.

Yet Tribune Business was told: “The majority of claims are already in and have been known for a long time. There would have been a list of creditors submitted to the courts more than a year ago.

“It’s really just a question of the committee validating them, and then deciding on the method of payment. It’s not a complex or terribly involved process, and will not be messy at all.”

Baha Mar owed some $123 million to trade creditors when it filed for Chapter 11 bankruptcy protection at end-June 2015, with 68 per cent of its total 5,172 creditors said to be Bahamian.

The majority of those 3,523 Bahamian creditors were Baha Mar’s then-2,200 employees, and especially the more than 2,000 who were terminated in October 2015.

“The majority of the claims are really the workers,” Tribune Business was told yesterday. “They are likely to get about 100 cents on the dollar. If you are owed $500,000 or less, you are likely to be made whole. That’s about 90 per cent of the creditors.”

Prime Minister Perry Christie last week said former Baha Mar staff would receive outstanding salaries, plus severance pay and other benefits, as part of the agreement with the China Export-Import Bank, Baha Mar’s $2.45 billion secured creditor.

And the stipulation that all creditors owed less than $500,000 are to be ‘made whole’ will also cover many Bahamian contractors and small and medium-sized businesses.

As for the larger Bahamian creditors, Tribune Business was told there would likely be negotiated compromises, with many recovering most - but not all - of what they are owed.

One source, speaking on condition of anonymity, suggested that there may be a trade-off between the sums larger Bahamian contractors are owed and their re-hiring to work on Baha Mar’s completion.

Acknowledging that large creditor claims would have to be dealt with “delicately”, the contact added that contractors may agree to accept a percentage of what they are owed in return for receiving future work on Baha Mar and other projects, coupled with payment guarantees.

Tribune Business was told that many Baha Mar creditors will be “glad” to recover something of what they are owed, given that many had already ‘written off’ these sums.

As unsecured creditors, their recovery would otherwise have depended on the purchase price that the Deloitte & Touche receivers were able to obtain in selling Baha Mar. The majority of the sales proceeds, if not all, would have gone to the China Export-Import Bank as secured creditor.

This newspaper was also told that the China Export-Import Bank had no obligation to make available the $100 million to pay Bahamian creditors, with the money expected to arrive in this nation within the next two weeks. It was pointed out that the sums owed were liabilities for Baha Mar that should be settled by its former developer, Sarkis Izmirlian.

Still, many are likely to compare the settlements set to be paid by the bank with Mr Izmirlian’s last, rejected offer, which was to make all creditors - China Export-Import Bank, the Bahamian contractors and all other creditors - whole.

While some have questioned whether Mr Izmirlian ever had the financing in place to accomplish this pledge, it is the Christie administration that has a much greater problem with public trust.

The FNM’s Mr Turnquest said of the Prime Minister and the Baha Mar deal: “He’s saying basically that he’s looking out for our best interests; trust him. We’ve trusted him before, and for most of us he’s been found a little bit wanting in that regard.”

This lack of trust has been exacerbated by Baha Mar’s receivers, with the China Export-Import Bank and the Government’s support, successfully persuading the Supreme Court to seal all details of the Baha Mar agreement from public eyes.

“There are more questions than answers to all of this,” Mr Turnquest told Tribune Business. “Does the fact that the documents are sealed mean the agreement is not finalised?

“The fact the money has not been paid into the Bahamas yet for the committee to begin pay outs is a concern. It’s another promise.

“Finally, what are the Bahamian people contributing to this settlement? Are the monies owed to the Government being fully liquidated, or are we giving up our claims in terms of dollars?” Mr Turnquest continued.

“Are we giving up any public land? Is the Government of the Bahamas paying money into this settlement? The Bahamian people are the stakeholders in this, not the Government, and not the PLP.

“Ninety-nine per cent of us want to know what’s in this deal. If we’re giving up assets, giving up land, giving up money, giving up receivables for state-owned entities and assets, it ought to come to the Bahamian people so we all know what’s happening.

“Any deal made today will affect the future and tie future generations of Bahamians into whatever commitments are made.”