The Tribune

An ex-Baha Mar director has slammed as "hogwash" claims that Sarkis Izmirlian lacked the $600 million financing needed to complete the project, accusing the Government of "playing the blame game".

Dionisio D'Aguilar told Tribune Business that the Christie administration was seeking to distract attention from its failed Baha Mar strategy by publishing copies of the advice it received on the matter from its UK and US attorneys.

He said that despite the Government's best efforts "to bamboozle the Bahamian people", most persons realised a "backroom deal" was done with the Chinese based on their promises to complete the project if Mr Izmirlian was removed as developer.

With the Chinese having failed to deliver on these pledges to-date, Mr D'Aguilar called on the Christie administration to "man up" and figure out a new solution to the Baha Mar impasse.

Mr D'Aguilar's comments came after Prime Minister Perry Christie last week said Baha Mar's receivers, the Deloitte & Touche accounting firm, had narrowed down the potential purchasers for the $3.5 billion project to two groups.

He added that one had a "Bahamian investor connection", an ambiguous comment that triggered much discussion over who he is referring to.

Tribune Business sources said a likely candidate was Mr Izmirlian's fellow Lyford Cay-based billionaire, Joe Lewis, and his Tavistock Group.

Tavistock Group contacts responded with a "no comment" when contacted by Tribune Business.

Mr Lewis and the Tavistock Group are the principal developers of the $1.4 billion Albany project in southwestern New Providence, which is in the middle of an extensive build out.

While mega resorts are not its core business, the Tavistock Group's heritage does lie in the restaurant and hospitality sector. It also has an interest in Atlanta's St Regis hotel, meaning that a Baha Mar bid would not be a huge 'stretch' beyond its main competencies.

The Tavistock Group is likely to be part of a bigger group bid , given Baha Mar's size and complexity. It previously partnered with the New York-based asset manager, Och-Ziff, for a bid on New Providence's South Ocean property which was unsuccessful.

Another local 'contender' was said to be David Kosoy, principal of the Sterling Financial Group. Mr Kosoy, who is said to be in Europe, did not return this newspaper's message to his direct e-mail address seeking comment.

Mr Kosoy's background, too, lies in financing real estate deals. Sterling and its investment funds financed the acquisition and redevelopment of the former Nassau Palm property on West Bay Street, and they are also likely to be part of a larger group.

However, some sources suggested yesterday that while Mr Kosoy and Sterling had been part of a Baha Mar bid team, their offer was not among the two referenced by Mr Christie.

Raymond Winder, Deloitte & Touche (Bahamas) managing partner, declined to comment on the identity of the two shortlisted bidders when contacted by Tribune Business yesterday.

Speaking from Seoul, South Korea, Mr Winder, one of the three Baha Mar receivers, said progress had been made in talks with both the China Export-Import Bank, the project's secured creditor, and China State Engineering Corporation, parent of its contractor.

Emphasising that he was referring both to the construction agreement and efforts to sell Baha Mar, he told Tribune Business: "We've made progress, and hope to complete this process soon."

This newspaper understands that the agreement to resume Baha Mar's construction has been drafted. Mr Winder, though, cautioned that even when a preferred bidder was selected, it might take several more months to negotiate and complete the $3.5 billion project's sale.

Meanwhile, the acrimony between the Government on one side, and Mr Izmirlian and his former Baha Mar directors and executives on the other, shows no sign of abating any time soon.

It reared up again last week, after the Christie administration sought to justify its opposition to Mr Izmirlian's Chapter 11 bankruptcy protection bid by publishing summaries of the advice it received from its foreign attorneys in summer 2015.

This provoked a sharp response not only from Mr Izmirlian, but Mr D'Aguilar, who said: "The Government is only trying to find excuses for why the project is not getting going and getting done.

"They're playing the blame game. Why did you come out one year later to say Sarkis Izmirlian doesn't have money? That's hogwash; of course he's got money. Everyone knows he's got money.

"They're [the Government] trying to blame someone for the catastrophic delay in the start of the project."

Mr D'Aguilar said the Christie administration had always justified its Chapter 11 intervention on the basis that it would speed up Baha Mar's completion, and better protect the thousands of Bahamian creditors.

Now, almost one year since Baha Mar's Chapter 11 filing, Mr D'Aguilar quickly pointed out that there have been no visible signs of progress towards the project's construction completion.

"They said they did it because it would speed up the project, and it turned out to be a complete and utter lie," he added of the Government's position.

"As everyone knows, it's obvious there was a backroom deal that went on; that if the Bahamian government supported them [the Chinese], things would happen.

"They got blindsided by the Chinese. Are the Chinese finishing the project? Are they selling the property?"

Mr D'Aguilar said both the China Export-Import Bank, as Baha Mar's $2.5 billion secured lender, and China Construction America (CCA), as the project's main contractor, had to-date "failed to deliver" on their promises.

The two institutions were last week said by the Prime Minister to be meeting with the Deloitte & Touche receivers in Beijing, in a bid to reach a construction agreement that would pave the way for Baha Mar's physical completion.

But, with no deal done yet, Mr D'Aguilar said: "The Chinese sold the Government a dream, and failed to deliver on that dream.

"The Bahamian creditors are now going to get screwed, and the Chapter 11 was to protect them. The Creditors Committee and all interests would have been protected."

Mr Izmirlian himself had last week pointed out that Baha Mar creditors’ committee had supported the continuation of Chapter 11 and his reorganisation plan, which he added had promised to pay Bahamian creditors 100 per cent of what they were owed.

The Prime Minister also last week admitted, via a Tribune Business article, that the Chinese have no obligation to pay Baha Mar’s unsecured Bahamian creditors, which was why he was pushing so hard on this issue.

The ‘framework agreement’ between the Government and the two Chinese state-owned entities deals with this issue in extremely vague language, which stops well short of a commitment to pay the Bahamian creditors anything - much less make them whole.

Mr D'Aguilar added that China Export-Import Bank, and the receivers, were also refusing to pursue the $192 million damages claim against CCA's parent in the London courts - an action that potentially represents one of the best creditor recovery sources.

"The whole thing's turned out to be a disaster," he told Tribune Business. "It's taken much longer, and the Bahamian creditors don't look like they're going to get anything out of it."

Mr D'Aguilar said the Government's US and UK attorneys had been "paid to say what they're going to say", and added: "They're not fooling anybody.

"Enough of the blame game. If the Chinese and the Government have a solution, get a move on with it. If you're so convinced you're doing it the right way, get on with it.

"Nothing has happened. It's June 2016, and they've not even laid another brick one year later. Man up, figure out a solution and move on."

The main justifications provided for the Chapter 11 opposition were that Mr Izmirlian had no realistic prospect for raising the $600 million necessary to complete and open Baha Mar, and that his move was merely designed to strengthen his negotiating position.

There was also the ‘sovereignty’ argument, in that Bahamian courts should not be made secondary to foreign courts in dealing with winding-up/receivership matters where the companies and assets involved are domiciled primarily in this jurisdiction.

Mr Izmirlian last week argued that the timing of the legal advice summaries, produced on June 20 this year, was an attempt to justify the Christie administration’s actions, as it came under pressure over the continuing impasse and its relationship with the two Chinese entities.

While Mr Izmirlian has never publicly provided 'proof of financing', his family remains of considerable means, having invested $800-$900 million to get Baha Mar off the ground.

Tribune Business last year reported that Mr Izmirlian’s reluctance to provide additional financing, or enter into any new funding agreements, was due to CCA’s continued involvement.

He wanted the contractor removed, and was also unhappy at the terms and conditions the Chinese were seeking to impose upon him.

His last offer to the China Export-Import Bank was that both sides should split the $600 million financing 50/50, with CCA cut loose.