The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet Minister yesterday slammed Dionisio D’Aguilar as “a complete hypocrite”, and said the Government had “from day one” set making all Baha Mar’s Bahamian creditors whole as “a condition precedent” to approving any purchase.

Jerome Fitzgerald told Tribune Business it was ironic the ex-Baha Mar director was calling for all local creditors to be fully compensated now, given that the Board he was part of tried to do exactly the opposite in filing for Chapter 11 bankruptcy protection last June.

The Minister of Education, who sits on the Cabinet sub-committee responsible for dealing with the Baha Mar impasse, added that “the record” from the Delaware Bankruptcy Court proceedings showed that Sarkis Izmirlian wanted all creditors to take a ‘haircut’.

Suggesting that this exposed the “hypocrisy” of Mr D’Aguilar’s call for the Government to protect Bahamian interests in any Baha Mar sale, Mr Fitzgerald said the Christie administration had already taken such a position.

He added that the Government had “made it abundantly clear” to both Baha Mar’s secured creditor, the China Export-Import Bank, and any prospective purchasers that no acquisition would be approved unless all Bahamian creditors received 100 per cent of what was due to them.

“Dionisio D’Aguilar is a hypocrite; a total and complete hypocrite,” Mr Fitzgerald said of the former Baha Mar director’s comments to Tribune Business yesterday.

“This is a director who was supportive of Chapter 11 bankruptcy proceedings in the US, where it’s public record what the intention of the then-owner was towards the creditors, particularly the contractors at the construction - to pay them cents on the dollar.

“The records show what the intentions of Mr Izmirlian and the developer were, not only towards the bank and Bahamian contractors, but all creditors - to take cents on the dollar.”

Mr Fitzgerald argued that it was “baffling” for Mr Izmirlian to have chosen the Chapter 11 ‘haircut’ route, only to turn around and promise to make all creditors ‘whole’.

“This is the same who was offering contractors 10-12 cents on the dollar. Now he’s talking about making them whole,” he added.

The Government first levied these ‘haircut’ allegations last summer, when the Chapter 11 bankruptcy protection court battle between Mr Izmirlian and his former Chinese partners was raging in Delaware.

Baha Mar’s original developer and Mr D’Aguilar responded by asserting that all Bahamian creditors would be fully compensated for sums owed under their restructuring plan, although the full details were never made public due to the Chapter 11 protection being dismissed by the US courts.

Mr Izmirlian has stuck to this position ever since, repeatedly asserting that his current offer to the China Export-Import Bank - first submitted in January 2016 - would totally repay all Bahamian contractors and other vendors.

Mr Fitzgerald, meanwhile, also accused Mr D’Aguilar of being “behind the 8 ball” in urging the Government to tell any Baha Mar purchaser to “go to hell” unless they commit to making all Bahamian creditors whole.

Pointing out that this had been the Christie administration’s stance “from day one”, he told Tribune Business: “The Government of the Bahamas, at all material times, has made it abundantly clear to the China Export-Import Bank and anyone interested in the purchase, that all Bahamian vendors must be made whole, particularly the contractors, before we approve it [the purchase].

“Dionisio D’Aguilar is late, behind the ‘8 ball’, disingenuous and being a total hypocrite.”

The sums required to fully compensate Bahamian contractors, vendors and the 2,000 former Baha Mar employees, who have also been forced to join the creditors queue in seeking due severance pay, are not insignificant and will add to the multi-billion dollar financing required by any Baha Mar buyer.

For starters, some 123 Bahamian contractors are owed a collective $74 million for work done at Baha Mar.

Then there are the trade vendors, suppliers and others. A total $123 million was said to be owed to trade creditors when Baha Mar filed for Chapter 11 bankruptcy protection last June, and Standard & Poor’s (S&P) recently put the project’s debts to creditors as high as $170 million.

The requirement that all Bahamian creditors be made whole could be ‘a deal breaker’ for some potential Baha Mar purchasers, especially Western-based buyers seeking deals.

They will already be looking for the China Export-Import Bank to itself take a ‘haircut’ on its $2.6 billion debt, and the last thing they will want to make is a commitment to repaying all Bahamian creditors.

Mr Fitzgerald yesterday conceded that the Government’s demands in relation to the Bahamian creditors may have contributed to the delays in resolving Baha Mar’s fate.

“That’s one of the reasons why things may not have moved faster; we made it a condition precedent,” he told Tribune Business.

“All of the big contractors know it, and we made it clear to the receivers and the China Export-Import Bank. We took that position from day one when we decided to oppose Chapter 11 in the first place.

“We made that very clear when we met with the receivers and the China Export-Import Bank. Without a doubt. Our economy is too small to absorb that kind of loss. For Dionisio D’Aguilar to come out with all that, it’s sickening. We made our position clear in terms of handling this.”

Mr D’Aguilar had previously told Tribune Business that the Christie administration had “better make damn sure” that any preferred Baha Mar bidder took care of the substantial debts owed to Bahamians, especially with a general election coming up.

Tribune Business sources familiar with recent developments have suggested that the 16 groups conducting due diligence on Baha Mar had translated into nine serious offers by the May 9 deadline set by the property’s Deloitte & Touche receivers.

Tribune Business understands that Prime Minister Perry Christie is getting increasingly eager to have something positive to announce in next week’s 2016-2017 Budget communication, and which shows concrete progress, on Baha Mar.

Tribune Business sources suggested that Mr Christie and the Government are pinning their hopes on being able to announce that an agreement has been reached for China Construction America (CCA), the project’s contractor, to resume construction at Baha Mar.

He announced that CCA and the China Export-Import Bank were working on such an arrangement during February’s mid-year Budget communication, but nothing has been heard on this since, especially with the bank giving every sign it does not want to invest a dollar more.