The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

PRIME Minister Perry Christie’s office last night effectively told Sarkis Izmirlian he was ‘on his own’ in seeking to reacquire Baha Mar, as it hit out at the “extraordinary statements” attached to his latest offer.

Mr Christie’s office, in a statement, said it felt “compelled” to mount another defence of how the Government had handled the dispute surrounding the $3.5 billion development, and efforts to remobilise the project.

The statement made clear that the Christie administration will not intervene on Mr Izmirlian’s behalf with the China Export-Import Bank, Baha Mar’s secured creditor, and encourage it to listen to his latest offer.

“If, as he states, Mr Izmirlian is in a position to, and wishes to work with, China Export-Import Bank to deliver Baha Mar for the Bahamian people, then he should engage seriously with Perfect Luck and its advisors,” the Prime Minister’s Office said.

“If he is in a position to make a credible proposal to acquire Baha Mar from Perfect Luck, then he is free to do so.”

Perfect Luck Holdings is the special purpose vehicle (SPV) created by the China Export-Import Bank to purchase Baha Mar’s real estate assets out of receivership, which is the first step towards completing the project’s physical construction prior to its sale to the ‘ultimate buyer’.

Meanwhile, the original Baha Mar companies have been placed into full liquidation under the supervision of the Supreme Court and the former provisional liquidators, Bahamian accountant Ed Rahming and his UK colleagues.

Combined, these two developments threaten to cost Mr Izmirlian and his family their total $800-$900 million equity investment in building up the Baha Mar project over the past 13 years.

The Prime Minister’s Office, making clear it was responding to Mr Izmirlian’s decision to ‘go public’ with his latest acquisition offer, said the original developer’s letter/press release “contain some extraordinary statements”.

Although it did not specify what the administration found “extraordinary”, last night’s statement said: “Normally the Government would not respond to such a letter and statement, but so far as it impacts on what the Government has achieved, which is well documented, in ensuring that the Baha Mar development is finished and Bahamian creditors paid, the Government is compelled to” respond.

The Prime Minister’s Office, which again tried to hint at doubts that Mr Izmirlian has the financing to make a credible offer, confirmed that the China Export-Import Bank’s SPV had acquired Baha Mar’s remaining assets.

This will allow Perfect Luck to sell the project “to whomever it wishes”, provided they are “acceptable” to the Government and obtain all the necessary permits and approvals.

Given that the Government has the power to reject any selected purchaser, it does possess the necessary leverage to force the China Export-Import Bank to deal with Mr Izmirlian if it so chooses.

However, the Prime Minister’s Office made clear that the Government has no intention of using this leverage, and therefore Mr Izmirlian’s latest offer - as with those previously - appears to be doomed from the outset.

Tribune Business sources last night said Mr Izmirlian had yet to receive a reply from the China Export-Import Bank or the Bahamian government to his letter, which was addressed to both the former’s vice-chairman, Liu Lange, and Mr Christie.

Some observers are likely to question why the Government is not at least encouraging the China Export-Import Bank to speak to Mr Izmirlian, given that he has promised to beat all rival bids on the Baha Mar acquisition price.

The original developer has also gone beyond the creditor payout compensation offered by the China Export-Import Bank and Perfect Luck by pledging to make all verified Bahamian and expatriate claims against Baha Mar ‘whole’.

However, as Tribune Business previously reported, the Beijing government, and its two entities at the centre of the Baha Mar saga, the bank and China Construction America (CCA), the project’s general contractor, have no wish to deal with Mr Izmirlian and are determined to oust him as the developer.

Any deal with Mr Izmirlian would likely require CCA to be removed from the project, a demand that has always been a ‘no go’ for the Chinese, with protection of the contractor’s interests seemingly paramount throughout the past 18-month saga.

The Christie administration, too, will probably be reluctant to entertain Mr Izmirlian, both because Baha Mar’s fate is largely out of their hands and the project appears to be progressing to remobilisation and construction completion.

The Prime Minister’s Office last night again suggested that Mr Izmirlian had, in effect, betrayed Mr Christie and his government by ‘going behind their back’ over the Chapter 11 bankruptcy protection filing while negotiations were ongoing to save the troubled $3.5 billion project.

“At each stage of the process (which commenced when Baha Mar’s developer, Sarkis Izmirlian, without any prior notice, arranged for the Baha Mar companies to file Chapter 11 bankruptcy proceedings in the United States), Mr Izmirlian has had the opportunity to participate in discussions and the process surrounding the future of the resort,” the statement said.

However, the Prime Minister’s Office made no mention of the fact that the ‘proposed purchaser’ came from outside the sales process run by Baha Mar’s Deloitte & Touche receivers.

The latter were unable to agree satisfactory terms with the ‘preferred bidder’ found by their process, which led Mr Izmirlian to complain in his latest offer about being treated with ‘double standards’.

The original developer said he had been informed “multiple” times that his offers would only be entertained if submitted through the receivers’ process, yet the China Export-Import Bank and receivers had gone outside this to find the purchaser.

Mr Izmirlian had also complained that the sales process structure was designed to prevent him from bidding, as it sought to impose impossible restrictions on speaking to former Baha Mar executives, and could have compromised the $192 million legal claim against the project’s contractor.

The Prime Minister’s Office last night ignored much of this, instead patting itself on the back.

“After much hard work, the project is back on track,” it said. “Re-mobilisation has commenced and, through high level, good faith negotiations, a substantial fund has been established by China Export-Import Bank for the payment of creditors’ claims, and former Baha Mar Bahamian employees are already being paid.

“Those were two of the Prime Minister’s three stated primary objectives, and they have been achieved. The third objective is to ensure that Baha Mar is sold to a world class hotel and casino operator. The Government of the Bahamas will continue to work tirelessly to ensure that this objective is fulfilled, in the very best interest of the economy and the people of the Bahamas,” the Prime Minister’s Office added.

“Real progress is being made and that progress must continue through to the completion and successful operation of the resort by a world class casino and hotel operator.”

Baha Mar has likely been reserved for a Chinese group or consortium to purchase, and the Government will likely press for at least part of the $3.5 billion project - probably the casino and casino hotel, plus the convention centre, Hyatt and the golf course - to be completed and open in time for both the end-winter season and 2017 general election.