The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s rush into bankruptcy protection will have a “substantial” negative impact on private sector confidence, a leading businessman yesterday warning that it would also further slash the Bahamas’ economic growth.

Franklyn Wilson, the Arawak Homes chairman, told Tribune Business that the potential redundancies of several thousand Baha Mar staff would cost the Bahamian economy millions of dollars in lost spending power and disposable income.

With many of Baha Mar’s estimated 3,500 creditors Bahamian companies and individuals, some of whom are owed nine-figure sums, Mr Wilson warned that the Bahamas’ GDP growth forecast for 2015 was likely to be cut again.

“Everyone had been looking forward to this so much,” Mr Wilson said of Baha Mar’s opening, hinting at the negative psychological impact likely to flow from the deepening problems at a project that was the centrepiece for the Government’s economic recovery plans.

“There are lots of people who do not now know whether, in a matter of weeks, they’re going to be getting salaries. If they do not get that salary, it’s going to have a multiplier effect for everybody.”

Pointing to the investments made by Bahamians in Baha Mar’s retail and restaurant outlets, and the sums owed to numerous local contractors, Mr Wilson added: “We are now told there are very, very substantial creditors, possibly at the nine-figure level. That’s huge.

“Those businesses have to worry about a nine-figure impact to their balance sheets and income statements. That’s very material.”

And he conceded that the indefinite delay to Baha Mar’s opening meant that the Bahamas’ GDP growth projections how have to be “revised” downwards.

The International Monetary Fund (IMF) has already cut the Bahamas’ 2015 projected GDP growth from 2.3 per cent to 1.8 per cent - a reduction of some $40 million.

Moody’s, the international credit rating agency, has already done likewise, cutting its forecast from 2 per cent to 1.7 per cent.

Given that these moves were taken before Baha Mar’s Chapter 11 filing, it is likely that there will be further negative revisions to the Bahamas’ 2015 GDP growth forecasts and, possibly, to 2016 projections as well.

Apart from the impacts outlined by Mr Wilson, other private sector sources said the fall-out from the Baha Mar situation could include further sovereign credit rating downgrades; the inability of Baha Mar staff to service loans and other obligations; increased unemployment; reduced foreign direct investment; and the possible withdrawal of Baha Mar’s three hotel brands - Rosewood, Grand Hyatt and SLS.

Mr Wilson, meanwhile, expressed sympathy for Baha Mar’s principal, Sarkis Izmirlian, telling this newspaper: “It’s not a good thing to see any entrepreneuer have his dream dashed like this.

“It’s a very sad thing for the country, and a very serious thing for the country, and anyone who has any regard for the country has to do whatever they can to bring about a solution.”

Mr Wilson said the one ‘saving grace’ for Baha Mar was that it was in none of the parties’ interests - the developer, Chinese and the Government - to see the property sit idle and unfinished.

Suggesting that it was still a question of ‘when’, not ‘if’, Baha Mar would be finished, he added: “One has to believe that the stakeholders have so much invested that the longer it stays in its current state, depreciation will start taking over at a pretty accelerated rate.

“No stakeholder’s interest will be served by the status quo remaining for long. One has to assume that whatever options exist, they are on the table for consideration, because the status quo is in no one’s interest.

“From that point of view, it’s hard to see how this can have any kind of end other than, at some stage, this thing is complete and operational. The question is when.”