The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sarkis Izmirlian has told Tribune Business he “feels like a punching bag” following the Government’s decision to file a winding-up petition against Baha Mar.

The development’s chairman and chief executive revealed his inner feelings in a brief e-mailed response to this newspaper, as one Baha Mar director slammed the Government for throwing “a premature curve ball” into Mr Izmirlian’s fragile negotiations with his Chinese partners.

Dionisio D’Aguilar, who sits on the Baha Mar Board, told Tribune Business the Christie administration should have waited until at least today before filing its Supreme Court petition to wind-up 14 Bahamian-domiciled Baha Mar companies.

He described Mr Izmirlian as “shocked” and “stunned” at the speed with which the Government filed the petition, given that negotiations between Baha Mar and its Chinese partners, the China Export-Import Bank and China Construction America, were still continuing in Beijing.

Similar sentiments were expressed by Thomas Dunlap, Baha Mar’s president, who told the developer’s staff on July 17: “The Prime Minister’s announcement last night of the Government’s intent to file a winding-up petition to take control of the company [Baha Mar] was a surprise to us, as I am still in Beijing meeting with our contractor and lender.

“This is a novel and complex situation, and we are carefully evaluating what this involves.”

Mr D’Aguilar, meanwhile, told Tribune Business he had been informed Baha Mar and its Chinese partners had “the makings of a working document” that laid out the roadmap for resolving their dispute, and getting the $3.5 billion project completed and open.

He said both China Export-Import Bank and China Construction America representatives told Baha Mar officials they had no prior knowledge of what the Government was about to do.

And, as a result of the winding-up petition, all sides had been forced to break from the negotiations to assess the ramifications of the Government’s move for their own respective positions, and the project as a whole.

“I just wish the Government had waited until the discussions had finished, because the negotiating parties are having to assess this curve ball, and this has impacted the likelihood of the discussions coming to a successful conclusion by Monday [today],” Mr D’Aguilar told Tribune Business.

“You’ve got to have these three parties in the room to make a deal. If you’re not going to have them in the room, it’s going to be very hard to bring this project to fruition.

“The discussions haven’t broken down. They were negotiating in Beijing, and it would have been good to let that process finish before taking this step.”

Mr D’Aguilar acknowledged that “there were some sticking points, not insurmountable, but there were big elephants in the room” based on his understanding of the talks. He added that the China Export-Import Bank “seems very conciliatory and anxious to make a deal; the contractor less willing”.

Tribune Business sources familiar with the negotiations confirmed the China Export-Import Bank had offered to provide Baha Mar with an extra $100 million in working capital to cover its initial start-up and operational costs, on top of the $300 million needed to complete construction.

Baha Mar is understood to have also sought another $100-$200 million, likely to cover the debts owed to Bahamian suppliers, contractors and others.

Mr D’Aguilar confirmed that Baha Mar required more financing the $300 million that was being discussed in June because the proposed construction completion date had been pushed back from August 15 to a new target of November 30 this year.

“You would need more money to carry this extra load for a few months,” he explained, adding that the well-publicised disputes meant that Baha Mar was likely to “suffer significant operating losses at the outset” because the travel market would wait and see whether it was truly open.

Baha Mar’s position that talks with both its debt financier and construction partner were ongoing contrasts sharply with the Government’s, which suggested that talks between the parties had finished last Wednesday.

One source familiar with the talks, speaking on condition of anonymity, said wryly that the status of negotiations depended on how Baha Mar’s “ongoing discussions” statement was interpreted.

Suggesting that the talks were less substantive, and less involved, than Baha Mar was implying, the source implied that negotiations last Wednesday may have amounted to “a letter going around between the three parties”.

Mr D’Aguilar suggested that the Government’s winding-up petition, and move to have the Supreme Court appoint a liquidator for Baha Mar, may in the first instance have been a tactical ploy to concentrate minds and infuse the developer and its Chinese partners with a sense of urgency to close a deal.

“I think that it’s clearly a strategic move by the Government to demonstrate to the people that they’re acting in the best interests of the people, and saying to all the parties involved: ‘This is what’s going to happen if you don’t come to a decision’,” Mr D’Aguilar said.

This was backed up by Damien Gomez, minister of state for legal affairs, who on Friday said that if the court approved the winding-up petition it would be in Mr izmirlian’s interest to “strike a deal as soon as possible”.

Mr D’Aguilar, though, emphasised that he understood the Government’s desire for Baha Mar to open as soon as possible, given the project’s importance to job creation and the economy.

“Speaking first as a Bahamian, I agree that this project must be brought to a successful conclusion as quickly as possible. I get that,” he said.

“It’s just unfortunate that this move, while admittedly somewhat strategic by the Government to say: ‘This is what will happen if you don’t reach an agreement’, it may have delayed a resolution.

“I felt they could have waited until the discussions were finished. It could have the effect of moving discussions along, but I don’t think so.”

Mr Izmirlian, in a message to Baha Mar staff at the weekend, said he had written to Prime Minister Perry Christie at the weekend “asking for a cessation of the legal wrangling” so discussions could continue and a settlement be reached outside the courtroom.

He pledged: “We are continuing to engage with both our lender and our general contractor to find a solution. We will continue to do so as long as long as all parties are willing to come to the table. We will not get up from the table until we find a solution.”

However, Mr Izmirlian still could not resist a swipe at both the Government and his Chinese partners, implying that they were operating dual strategies with the ultimate goal of ousting himself and his family from the project and their $850-$900 million investment.

“We ask that all the other parties concerned come to the table with a real spirit of compromise, and no hidden agendas,” Mr Izmirlian said.

“I believe that if that is the case then a solution can and will be found. If parties are communicating in the background and planning other actions, it is impossible for all parties to find a consensual solution.

“For Tom Dunlap, I will use an American Football metaphor: If one of the two teams in the Super Bowl believes that even if they lose they will still get the ring, why would they try? Why would they go for the extra pass, get their faces planted in the dirt, or their bodies bruised and battered?”