Baha Mar Secures $15m For ‘Approved And Budgeted’ Expenses


Tribune Business Reporter


BAHA Mar has secured nearly $15 million in debtor-in-possession (DIP) loans to meet approved and budgeted expenses, despite failing to secure the requisite government approvals.

On July 1, a US bankruptcy court in Delaware approved the debtor-in-possession facility on an interim basis, authorising the debtors to borrow up to $30 million to fund the maintenance of the $3.5 billion resort property, pay necessary operating expenses and finance the administrative costs of the Chapter 11 Cases. Baha Mar’s president Thomas Dunlap, in a supplemental declaration filed yesterday in support of the developers’ objection to the motions to dismiss its US bankruptcy cases, addressed the status of the DIP facility and interim order.

“Following the entry of the interim order, the Debtors promptly sought certain approvals from the Central Bank of The Bahamas and the Bahamas Investment Authority that are required under the laws of The Bahamas before the Bahamian Debtors can become obligated under the DIP facility or pledge their assets (such approvals are also therefore conditions to funding under the DIP Facility),” said Mr Dunlap. “The Government approvals have not yet been provided to the Debtors despite the fact that similar approvals have previously been provided by the government to the Debtors’ pre-petition lender.”

He went on: “The Debtors were also unable to obtain entry of a court order in The Bahamas extending the automatic stay to secured and unsecured creditors in The Bahamas within seven days of the petition date, which effectively functioned as an additional condition precedent to funding under the DIP facility. Given the absence of The Bahamas approvals and in order to nevertheless fund DIP advances to the Debtors, the DIP lender provided funding waivers to the Debtors and agreed to certain limited modifications to the structure of the DIP Facility to avoid the requirement of The Bahamas approvals.”

According to Mr Dunlap, the DIP lender, Baha Mar CEO Sarkis Izmirlian through his Granite Ventures Ltd entity, has advanced $14.936 million in DIP loans to Baha Mar affiliate, Northshore Mainland Services Inc, as borrower pursuant to certain promissory notes, in order to meet certain of the Debtors’ approved and budgeted expenses. Mr Izmirlian, via Granite Ventures, had given an $80 million commitment to provide redundancy funds and cover all Baha Mar’s working capital needs during the Chapter 11 proceedings.

“Notably, the government of The Bahamas has funded certain payroll obligations of the Debtors, which displaced funds that would have otherwise come from proceeds of the DIP Facility,” said Mr Dunlap.

“Due to the absence of The Bahamas approvals, under the modified structure, the advances made to Northshore are currently the obligations of Northshore alone and are secured only by the assets of Northshore located outside of The Bahamas. The modifications to the structure of the DIP Facility nevertheless will allow for proceeds of the DIP Facility to be advanced by Northshore to certain other Debtors, which obligations will be memorialised by an intercompany promissory note. In addition, in the event that The Bahamas approvals are obtained, each of the Debtors will be obligated to guarantee the advances under the DIP Facility and provide a security interest in substantially all their assets to the DIP Lender to support such obligations,” said Dunlap.

According to Dunlap, Granite Ventures Ltd, the lender, provisionally waived Bahamian approvals with respect to funding in the amount of $436,000 on July 22. On July 27 a further $5 million was advanced to Northshore under the DIP facility and a further $9.5 million on August 12.


ObserverOfChaos 4 years, 11 months ago

Baha Mar will proceed in spite of the stupidity of the Bahamian Government and their attempted couip......good luck Baha Mar on other issues too!


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