The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar's new owner last night said the acquisition closing will "pave the way" for further investment and expansion at the $4.2 billion development.

Chow Tai Fook Enterprises (CTFE) confirmed Tribune Business's exclusive revelation on Tuesday that it had finally completed Baha Mar's purchase from the China Export-Import Bank's Perfect Luck Investments vehicle, adding that the project had also obtained its "permanent" occupancy certificate.

The Hong Kong-headquartered conglomerate, headed by the Cheng family, said it had fulfilled all Baha Mar hotel opening milestones to-date, with the project's workforce set to expand from its current 3,500 to 5,000 by year-end 2018 - a 42.9 per cent increase. No purchase price was disclosed.

The acquisition completion's announcement was not without mishap, however. For Baha Mar sent a press statement complete with previous edits, showing that language urging Bahamians to get behind CTFE's ownership and praising the workmanship of the project's main contractor, China Construction America (CCA), was cut from the final version.

Deleted was the line: "It is time for all Bahamians to embrace Baha Mar positively, as the success of Baha Mar is good for the Bahamas." While few would disagree with the latter half of that statement, many observers are likely to interpret it as exposing CTFE's sensitivity to the fact that many Bahamians are ambivalent towards its ownership, given concerns over how Baha Mar's original developer, Sarkis Izmirlian, was ousted.

CTFE is understandably keen to put Baha Mar's recent past of Chapter 11 bankruptcy protection filings, hostile litigation, provisional liquidation, receivership and liquidation behind it, and focus on the future.

However, the statement issued to Tribune Business also showed that a sentence praising CCA was cut from the final version. This read: "According to Baha Mar officials, all construction at Baha Mar has been performed above and beyond satisfactory levels."

Such language will likely raise eyebrows, especially among Mr Izmirlian and his team, who repeatedly argued that CCA's "shoddy workmanship", and inability to complete Baha Mar's construction 'on time' and 'on budget' - with multiple deadlines missed - was chiefly responsible for its placement into Chapter 11.

Graeme Davis, Baha Mar's president, was more interested in focusing on the future in e-mailed replies to Tribune Business's questions, emphasising that CTFE's way was now clear to further expand the $4.2 billion project.

"We consider this a significant milestone, as its deals with the closing finish, and also paves the way for further capital investment by the owning company to invest and further expand the product offering of Baha Mar for the future," he said.

Mr Davis said Baha Mar was seeing "robust bookings" for the Christmas/New Year and winter seasons at both the Grand Hyatt and SLS Lux properties, following the launch of the project's marketing campaign on November 1.

"The bookings are extremely encouraging for the winter season," he added. "The promotional campaign has been very impactful, and there are very robust bookings going into the New Year and winter seasons."

Mr Davis said Baha Mar was "very confident" that it would meet the deadline for the Rosewood hotel property's opening in Spring 2018, adding: "We see no reason that will not happen."

He was also optimistic that the Government will fulfill its Heads of Agreement obligations to Baha Mar when it came to remediating the New Providence landfill, improving electricity supply reliability and developing a wastewater treatment plant to service the project.

"We are very confident the Government will live up to its commitments under the Heads of Agreement," Mr Davis said.

The Heads of Agreement requires the Government to address these obligations to Baha Mar's satisfaction by December 31, 2017, targets. Failure would relieve the resort and CTFE, at least temporarily, from its own 'Heads of Agreement' commitments.

The previously-sealed 'Heads of Terms' for Baha Mar's construction completion, disclosed earlier this year, revealed that CTFE's purchase closing deadline had been extended to December 1, 2017, from November 22, 2017. This was done via a letter signed by Creswell Sturrup, then-permanent secretary in the Prime Minister's Office, which was attached as an amendment to the 'Heads of Terms'.

CTFE, the Hong Kong-based conglomerate controlled by the Cheng family, committed in its Baha Mar 'Heads of Agreement' to incur "acquisition consideration, pre-opening expenditures and operating losses and capital spending of at least $2 billion".

It has already achieved one 'milestone' in ensuring the SLS property was opened by December 1, and the Grand Hyatt and casino by April 28, while the 'Heads of Agreement' also relieved CTFE of the obligation to "fund all public infrastructure costs outside the boundaries of the project necessary for a world-class resort, in addition to providing for waste treatment or back-up electric power and water desalination facilities". These obligations had been imposed upon Mr Izmirlian.

"Today is the culmination of our efforts to purchase and open this spectacular resort destination," said Mr Davis. "We have exciting plans and I am immensely proud of the progress our team has made over the last year.

"Baha Mar currently employs 3,500 Bahamians. We anticipate increasing the number of Bahamians employed at Baha Mar to over 5,000 associates by the end of 2018. We project that Baha Mar will contribute 12 per cent to the GDP of the Bahamas in future years.

"To advance our plans to grow employment and spur economic growth in the Bahamas, on November 1 we launched Life Spectacular, a multi-million dollar marketing and advertising campaign to global audiences."