The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian construction industry was yesterday “cautiously optimistic” that a resolution to its collective $74 million Baha Mar receivable is in sight, although “not everyone” will be made ‘whole’.

Leonard Sands, the Bahamian Contractors Association’s (BCA) president, told Tribune Business the sector had drawn encouragement from the ‘joint statement’ between the Government and the Chinese over Baha Mar’s purported construction remobilisation.

He said the statement’s wording showed a recognition on behalf of China Construction America (CCA), Baha Mar’s original contractor, and the China Export-Import Bank that the multi-million dollar debts owed to Bahamian contractors and suppliers needed to be settled.

Mr Sands based his optimism, at least where the Bahamian contractors were concerned, on the ‘leverage’ many of them held over CCA. Those it needed to perform specific, specialised tasks, could refuse to return to the construction site until debts owed to them were settled.

“I was getting calls yesterday as soon as that information [the joint statement] came out from everyone involved,” Mr Sands told Tribune Business.

“We can really look at it with cautious optimism. I think the intent is there, based on the wording of it, that there is a recognition there are monies owed that need to be settled.”

The ‘joint statement’ of the Government and two Chinese state-owned entities said: “It is expected that many contractors who have participated in the construction of the project will be re-engaged in the process.

“The requirements of the unsecured creditors will also be considered during the remobilisation.”

The language employed is very vague, and hardly represents a binding commitment by the China Export-Import Bank and CCA to make every Bahamian contractor and other creditor ‘whole’.

Still, Mr Sands said it was sufficient for the Bahamian construction industry to draw comfort that the dire financial predicament of many contractors, sparked by Baha Mar’s failure, was not being ignored or forgotten.

Jerome Fitzgerald, minister of education, science and technology, confirmed to Tribune Business recently that the Christie administration had set making all Bahaman creditors whole as a ‘condition precedent’ for it to approve any new Baha Mar sale and purchaser.

And Mr Sands pointed out that many Bahamian contractors would likely refuse to return to the Baha Mar site unless made ‘whole’ by CCA.

“If you want to engage a guy, but owe him $2 million or $5 million, you’re going to have to consider how you’re going to satisfy that debt, especially if you need him to complete something,” Mr Sands said, explaining the leverage many Bahamian contractors will have.

The BCA chief acknowledged, though, that the collective $74 million debt owed to the 123 Bahamian contractors would not be settled as a block, but instead on a ‘case-by-case basis’.

“The feeling is that not everyone will be made whole, but a significant number will be made whole,” Mr Sands told Tribune Business of the construction sector mood.

“The industry is waiting for further details. We can’t speak blanket to all persons involved, as it will be done on a case-by-case basis.”

He added that the Prime Minister’s reading of the ‘joint statement’ in the House of Assembly had lifted the construction industry’s mood, although more details about Bahamian contractor involvement in any Baha Mar construction re-mobilisation - and the payment of outstanding debts - were required.

“No one wants to see something as significant as that sit there without some final conclusion,” he added of Baha Mar.

“Everyone’s excited, although they’ve not been told about how they will be engaged or involved.

“It means that money will be spinning in the Bahamas again, and there is the possibility of persons getting contracts and possibility of being re-engaged. That’s good news for the construction industry.”

Whether CCA would seek payment of the pre-Chapter 11 debts owed to itself and its Bahamian sub-contractors has been among the key questions yet to be fully answered in relation to Baha Mar.

Mr Christie on Wednesday unveiled a so-called “framework” agreement between the Government, and Baha Mar’s two former Chinese partners, which he touted as providing “a pathway” for the $3.5 billion project’s construction completion.

The arrangement provides for a framework putting in place the financing required for completion of the project, and for China State Construction Engineering Company’s indirect subsidiary, CCA (Bahamas),to remobilise and re-start construction as expeditiously as possible,” the statement says.

“Negotiations between CCA (Bahamas) and the receivers appointed by China Export-Import Bank are underway to agree appropriate terms for construction to recommence, and to prepare a construction agreement, which will provide the scheduled timeline for completion of the project.”

The statement contained no details on the timelines for mobilisation, and when construction work on the $3.5 billion project will resume, nor any specifics on costs and construction budgets. The last price tag mentioned publicly suggested $600 million worth of work remained.

Instead, it appears to be an agreement to continue talking and working together towards a final agreement, with the Deloitte & Touche receivership team and CCA now required to negotiate the terms of a construction contract.

And it hardly amounts to a cast-iron, binding commitment to make ‘whole’ all the Bahamian contractors, vendors and former employees owed multi-million dollar sums over Baha Mar.