The Tribune

By NEIL HARTNELL

Tribune Business

Editor

nhartnell@tribunemedia.net

A former Baha Mar director yesterday suggested that Sarkis Izmirlian will “rise up and go again”, but not in the Bahamas with its “sullied” investment reputation as a result of the project’s demise.

Dionisio D’Aguilar suggested that Mr Izmirlian “could write a book” on where the Government went wrong in its handling of the Baha Mar dispute, after its Chinese contractor’s failure to complete on time, and on budget, sparked a financial crisis for the developer.

Mr Izmirlian, via his BMD Holdings vehicle, yesterday issued own statement that described the China Export-Import Bank’s takeover of the Baha Mar project as the latest in a series “of disastrous actions” taken by the Chinese and Christie administration since the June 29 filing for Chapter 11 bankruptcy protection.

Mr Izmirlian said the bank’s successful appointment of Deloitte & Touche as the project’s receivers, which was ratified by the Supreme Court, was “destroying any hope” that the original vision for Baha Mar could be realised.

He suggested that the “widespread collateral damage to hundreds of businesses”, and termination of 2,000 Baha Mar employees, could have been avoided had the Government and the Chinese not successfully opposed plans to restructure the development via Chapter 11 procedures.

Mr D’Aguilar, meanwhile, a friend of Mr Izmirlian as well as ex-Baha Mar director, said the China Export-Import Bank’s receivership would likely not have surprised the developer.

“I’m sure Mr Izmirlian knew exactly where these negotiations were going,” Mr D’Aguilar told Tribune Business. “He knew this was imminent if he was not prepared to make an agreement on their [the bank’s] terms.”

He acknowledged that the Izmirlian family’s purported $850-$900 million equity investment in Baha Mar was now at risk, and added: “It’s a blow to lose that amount of money, but life goes on.

“He tried, he failed, but this will not kill him. He’ll rise up to go again, but not here.”

Mr Izmirlian and his father, Dikran, still retain a vast fortune as a result of the latter’s control of the world’s peanut supply. They have used the wealth generated from that venture to expand into a diverse range of investment holdings, including real estate and property, and have the ability - as billionaires - to eventually put the Baha Mar debacle behind them.

“This project has left a bad taste in a lot of people’s mouths,” Mr D’Aguilar added. “The failure of this project has clearly sullied the Bahamas’ investment reputation, no doubt about it.

“You hear it all the time: People were looking at the Bahamas, and this caused a lot of them to pause. They [the Government] stopped, reviewed and cancelled. They will have a lot to do to rebuild the image that we’re positive and investor friendly.

“The Government will argue probably that they did nothing wrong. I’m sure Sarkis could write a book on where they went wrong,” he said.

“But this is business. This is for the big boys. This is what happens when you go into business. We’ll see where it goes.”

Mr Izmirlian, in his statement yesterday, said: “The appointment of a receiver by the Export-Import Bank of China continues the unfortunate pattern of disastrous actions taken by other stakeholders since Baha Mar has filed for Chapter 11, [which] have moved Baha Mar further from completion and are now destroying any hope that Baha Mar, as originally conceived for the Bahamas, can become a reality”

Mr Izmirlian reiterated his belief that the root cause of Baha Mar’s woes was the failure of the project contractor, China Construction (America), to complete the $3.5 billion development on time and on budget.

Accusing it of “reckless and self-serving actions at the expense of the project”,Mr Izmirlian also slammed the Christie administration for contributing to Baha Mar’s “liquidity crunch” by withholding the $21 million-plus owed over the West Bay Street re-routing.

This resulted in the Chapter 11 filing, which would have ensured Mr Izmirlian remained in control - something that could not happen under Bahamian law.

“Under Chapter 11, Baha Mar’s assets would have been protected; we would have had the opportunity in a prudent manner to try to resolve the issues between the parties; we put forward a plan to pay all valid Bahamian claims in full; we were able to continue to pay the salaries of the more than 2,000 Baha Mar employees; and any downsized employees would have received severance, which sadly they will now not receive,” Mr Izmirlian said.

“However, the Government of the Bahamas, in concert with China Construction (America) and CEXIM, undertook a campaign that resulted in the Chapter 11 being dismissed. The effect of this effort by the Government of the Bahamas, China Construction America and CEXIM now leaves Baha Mar in the position where CEXIM bank is now the owner of Baha Mar; most of its employees have been laid off; widespread collateral damage to hundreds of businesses; and its assets are being further impaired.”

Mr Izmirlian added that the receivers’ appointment would not “serve the best interests” of any party to the dispute or the Bahamian people, as he accused the Chinese and the Government of being “more focused on legal and political manoeveres than solutions”.

Allyson Maynard-Gibson, the attorney general, last week disputed Mr Izmirlian’s assertions that continuing the Chapter 11 process could have avoided employee lay-offs and resulted in a faster project opening.

“On July 10, Baha Mar told the Bankruptcy Court that in the absence of an agreement ‘in the near term’ with the Export-Import Bank, Baha Mar would ‘be compelled to immediately downsize their operations to a minimum over approximately 45 to 60 days, which includes . . . reducing their work force to a skeletal staff . . ..’,” Mrs Maynard-Gibson said.

“According to a July 10 affidavit submitted by Baha Mar’s president, the ‘skeletal staff’ would have comprised only 52 employees, plus an additional 47 employees ‘to assist with the wind-down of their respective operations . . . notwithstanding their impending termination.’”

She branded Baha Mar’s Chapter 11 restructuring plan as “entirely hypothetical, and it offered no hope of avoiding workforce reductions. The plan hinged entirely on the availability of at least $400 million to $600 million of ‘exit financing’, for which Baha Mar management did not purport to have any commitment from anyone.”