The Tribune

By KHRISNA VIRGIL

Tribune Staff Reporter

kvirgil@tribunemedia.net

THE government yesterday blamed Baha Mar’s refusal to provide a guarantee for additional lending as the only element that stood in the way of securing a deal for the completion of the $3.5bn mega resort after the Bahamas delegation left talks in Beijing empty-handed for a second time.

According to a statement released by the government, this guarantee is required by the Export Import Bank of China to secure a commitment of additional lending needed to jumpstart the stalled project.

With this, the government is expected to move forward with its winding up petition before Justice Ian Winder on Friday.

Meanwhile, Baha Mar shot back at the government calling these latest allegations “posturing and attempts to score political points under the pretence of being passive observers” in ongoing discussions.

While the talks were convened in an attempt to resolve issues arising from the developer’s inability to complete Baha Mar due to construction cost overruns and other serious financial matters, resort developer Sarkis Izmirilian did not attend the discussions at all, the government’s statement said.

The government further noted that Baha Mar did not attend day one of the talks.

“The developer has declined to provide any guarantee (apart from the $25 million letter of credit) and has proposed as an alternative that the government  provide EXIM with a ‘sovereign guarantee’ of up to $175 million in place of any guarantee by the Contractor (China State Construction Engineering Corporation),” the government’s statement read yesterday.

“The talks ended with the parties agreeing to continue discussions among themselves. It was understood, however, that in the meantime the parties might continue to pursue other legal options.”

The new financing proposed for Baha Mar would include $200 million in new lending by EXIM, over and above the amount still available under its existing credit facility, the government said. 

“EXIM has insisted that its new $200 million credit extension be guaranteed by the Contractor and/or the developer. The developer has proposed to provide a standby letter of credit to back $25 million of the new $200 million credit extension.

“The contractor has offered to guarantee the remaining $175 million on the condition that it receives a corresponding guarantee by the developer. In the most recent discussions the contractor has agreed that the amount of the guarantee could be limited to $100 million.”

The statement added that on several occasions, Attorney General Allyson Maynard Gibson, QC, who led the Bahamas delegation, stressed the Christie administration’s sole objective to remobilise the project to have it completed in the shortest possible time.

“The government prefers agreement between the parties which is why the Prime Minister (Perry Christie) asked the delegation to return to Beijing for a second attempt at a negotiated settlement in the context of four party talks.  Useful bilateral discussions were held between the parties on the way forward for completion of project as soon as possible.

“During the four party talks the parties arrived at several proposed compromises. While urging the parties to arrive at an agreement during the talks, EXIM pointed out that the contract documents between the parties stipulates that cost overruns should be borne by the Developer and that the Contractor should finish the Project. 

“The contract documents were drafted in this manner so that the Project would be completed and the parties would then be free to pursue remedies against each other in the courts. As EXIM indicated, Baha Mar has decided not to complete the Project in accordance with the contract documents.” 

In its statement, Baha Mar said the ongoing discussions are not about politics but to achieve a resolution. 

“We continue to be disappointed by the government’s posturing and attempts to score political points under the pretence of being neutral observers in our ongoing discussions in China,” the resort’s brief statement said.

“The latest press statement by the government is apparently constructed to suit the government’s agenda and reputation.

“For Baha Mar these discussions are, simply put, not about politics but rather achieving a resolution so that Baha Mar can be properly completed and opened, that the well-being and efforts of Baha Mar’s more than 2,500 employees are preserved, and so that Baha Mar, once opened, can be an important economic spark plug in The Bahamas.

“The facts are: Baha Mar has made very viable proposals and discussions between the parties are continuing. We are hopeful that a productive outcome will result.”

The four party talks, which were held from Sunday to yesterday, took place between Baha Mar Ltd, led by Mr Greg Djerejian – BML Vice President (Asia-Pacific); CSCEC led by Mr Chen Guocai – Vice President; EXIM, led by Mr Liu Liange – President and The Bahamas government was led by the Attorney General.

In the first round of discussions, EXIM and the government of The Bahamas were observers at bilateral talks held from July 20 to 24 between the developer and the contractor.

EXIM also chaired a meeting between the developer and contractor on July 24 at which the government of The Bahamas was an observer.