The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister has been urged to stop giving Bahamians “false hope” that a Baha Mar resolution is imminent, with the $3.5 billion development unlikely to be fully open before the next general election.

Branville McCartney, the Democratic National Alliance’s (DNA) leader, told Tribune Business that a solution was being made more difficult because Baha Mar’s reality did not “line up” with its $2.45 billion financier’s objectives.

He emphasised that the China Export-Import Bank’s desire to recover 100 per cent of its funding did not match the value of Baha Mar’s real estate assets, which the bank itself last week admitted were declining/depreciating on a daily basis.

Pessimistic that Bahamian contractors, suppliers and former Baha Mar employees would fully recover what is owed to them, Mr McCartney suggested that the bank’s position, rather than the Prime Minister’s ‘optimism’, provided a better guide as to when the project was likely to be completed and open.

“The bank is saying that nothing is imminent in the short-term, and the Prime Minister is saying it’s imminent,” the DNA leader told Tribune Business. “Ultimately, the bank has the final say, and is the owner of Baha Mar.”

Mr McCartney said any solution for Baha Mar was “going to take some time”, especially since the China Export-Import Bank had confirmed it has yet to secure its desired “competent investor” to take over the development.

“The bank’s view is that there is a significant amount of money attached to that property,” the DNA leader told Tribune Business.

“The value of the money the is owed compared to the value of the property, it seems, does not line up. The bank wants its money back, $2.45 billion, but the investor is saying it’s not worth $2.45 billion, and the bank is going to have to determine whether it’s going to take a hair cut.”

Given these conflicting objectives and positions, Mr McCartney said the Prime Minister and his Government should not lead the Bahamian people to believe a resolution is imminent, given that a long work out period is clearly in the offing.

“False hope should not be given to persons that this matter will be resolved imminently,” he told Tribune Business.

“I do feel for Bahamian contractors and persons who have invested significantly in that property, and whether they get their money back is going to be a very serious question.”

Mr McCartney said any Baha Mar purchaser would need to invest $600 million, based on the sums quoted by the Prime Minister, to ensure the hotel complex was compliant with Bahamian Building Codes.

Putting this into perspective, he pointed out that this number was triple the figure quoted by Mr Christie for the scale of investment at the recently-announced Children’s Bay Cay in Exuma.

“Any half reasonable person would know that is not going to open any time soon,” Mr McCartney told Tribune Business of Baha Mar. “You have to re-staff, re-train and advertise that property.

“It would seem very unlikely that that property will be functioning to its full capacity before the next election.”

Mr Christie quietly left the Bahamas on Tuesday evening, heading for five-day series of meetings in Europe.

His departure was not officially announced, as is the norm, but he is understood to be accompanied by Allyson Maynard-Gibson, the attorney general; Sir Baltron Bethel, his senior policy adviser and ‘investments guru’; and Jerome Fitzgerald, minister of education, science and technology.

Tribune Business sources say he is headed for Geneva in Switzerland, where the Prime Minister is due to meet with Mediterranean Shipping Company (MSC) over its recently-approved $200 million private cruise port at Ocean Cay, and Freeport maritime training centre.

It is understood that he may also meet with representatives from the Malaysian conglomerate, Genting, majority owner of the Resorts World (Bimini) project, which the Government is trying to interest in taking over Grand Bahama’s only casino.

The Prime Minister may also seek to entice Genting into purchasing the Grand Lucayan property itself, given that the Government is seeking new ownership for the island’s so-called ‘flagship’ hotel.

Sources familiar with the Prime Minister’s trip have also suggested that he may meet with Middle Eastern and Chinese investor groups interested in purchasing Baha Mar.

Mr McCartney, meanwhile, said the Christie administration needed to “stop waiting, day in, day out” for a Baha Mar saviour, and instead focus on attracting other investors to help diversify the Bahamian economy away from tourism.

And he told Tribune Business that he was “praying to the Almighty” that the Bahamas did not suffer another downgrade of its creditworthiness, which would plunge this nation to so-called ‘junk’ status.

“I hope we don’t, but it is a possibility based on how things are at this stage,” Mr McCartney said of a further potential downgrade.

“I pray to the almighty that we don’t, but nothing has changed since last time, and they’ve [Standard & Poor’s] indicated that if nothing changes, there will be another downgrade.”

Should the Bahamas lose its investment grade rating, it would send the wrong signal to foreign investors, as it implies this nation is not managing its fiscal affairs properly.

It would also increase the Bahamas’ borrowing costs, and force the Government to pay more interest on future debt, sucking funds away from essential public services and the police.