The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

One Baha Mar creditor yesterday said he was “not losing sleep” over the interruption to negotiations for a ‘six figure’ contract with the developer, revealing that he was more concerned about the “bigger picture” impact.

Walter Wells, Caribbean Bottling Company’s president and chief executive, told Tribune Business that his prime worry from the Baha Mar fall-out was the impact on the developer’s employees and Bahamian businesses owed far more than his.

Expressing hope that all Baha Mar’s 3,500 creditors would ultimately be “made whole”, Mr Wells said the likely reduction in consumer spending power was the biggest potential hit to Caribbean Bottling’s business.

He revealed that the local Coca-Cola was “fairly well advanced” on a major equipment dispensing and drinks supply contract with Baha Mar until the latter’s financial woes, and last Monday’s Chapter 11 filing, intervened.

While Caribbean Bottling was not owed “a significant amount” by the $3.5 billion resort developer, it was in the process of ramping up their business relationship - a process that has now been halted, at least temporarily.

“We were in the process of negotiating with them a contract for execution,” Mr Wells told Tribune Business. “We had started negotiating the contract, and were fairly well advanced when this thing came along.”

Apart from supplying Baha Mar with its various soft drink brands, Mr Wells said the contract also involved the installation of drink dispensing equipment throughout the resort property.

Some of this equipment had already been installed, while other parts were in Caribbean Bottling’s warehouse, and Mr Wells said the company could always switch the inventory held in storage to other projects should the Baha Mar impasse become even more protracted.

While uncertain about just how lucrative the Baha Mar contract might become, Mr Wells told Tribune Business “it will be in the six-figure range”.

Noting that Baha Mar’s room inventory was slightly smaller than its mega resort counterpart on Paradise Island, the Caribbean Bottling chief added: “I would have expected it will not be as significant as Atlantis, particularly in the early stages, as they get ramped up and fill rooms.

“But it’s not what it does in year one or year two, but long-term as Baha Mar builds its reputation and gets more tourists into the economy. It would have been significant in terms of dollars and cents.”

Mr Wells, though, expressed greater concern for the impact Baha Mar’s Chapter 11 filing has had on other businesses/creditors, and both their employees and Baha Mar’s.

“It’s not an issue I’m losing sleep over. It’s not something causing us a huge amount of concern,” Mr Wells told Tribune Business over the interruption to his company’s contract negotiations.

Instead, he explained Caribbean Bottling’s main concern was the impact to Bahamian employment and the wider economy as a result of Baha Mar’s deepening divisions with its Chinese partners, the China Export-Import Bank and China Construction America (Bahamas).

“It’s the bigger picture we all need to be concerned about,” Mr Wells told Tribune Business, emphasising that any loss of jobs at Baha Mar would mean that “the spending power of our consumer base will be much lower”.

He added: “That’s the bigger picture that’s more worrying for me.”

Still, Mr Wells expressed optimism that the Baha Mar situation would be resolved, but it remains unclear when. “Whether it gets resolved next month, next year, it will get resolved. But what it looks like, I don’t know,” he added.

That is a reference to the fact that Baha Mar’s ownership and financial structure will likely change as a result of the Chapter 11 and spin-off legal actions, with either the Izmirlian family or their Chinese partners potentially ousted from the development and their investments.

“At the end of the day, we hope the owners can get it resolved and continue where they left off,” Mr Wells said, adding that Caribbean Bottling was “willing and able to serve whoever operates the property”.

He reiterated his concerns for Bahamian contractors, some of whom are owed multi-million dollar sums for work on the Baha Mar property. Osprey’s joint venture with Yates is owed more than $5 million, while the sums due to other Bahamian construction firms are wrapped up in the $72 million ($140 million according to the company) that is owed to China Construction America.

“They’ve got significant sums of money at stake,” Mr Wells said of the contractors. “They’ve got much more money at stake in this than we have.

“No one wants to lose a penny, and I wish we all come out of this whole. It may not be as quickly as we thought, but hopefully our investment will pay off down the road.”

Acknowledging that Baha Mar’s Chapter 11 filing was “an awkward situation”, especially for the trade creditors owed a collective $123 million, Mr Wells said of bankruptcy: “It’s a reality of doing business.

“It’s a unique situation, and a first for most of us doing business in this environment. Issues come along, and hopefully level heads will prevail.”