The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s deputy leader believes it “makes no sense” for there to be two different sets of receivers/liquidators looking after Baha Mar, branding the situation as “crazy”.

K P Turnquest told Tribune Business that allowing the joint provisional liquidators to remain in their posts following Deloitte & Touche’s appointment as Baha Mar’s receivers just adds “another ball of confusion” to the attempt to revive the stalled $3.5 billion project.

And he queried Prime Minister Perry Christie’s optimism surrounding numerous ‘contacts’ and ‘soundings’ taken by major international investors with respect to their acquiring, or becoming involved with, Baha Mar.

Mr Turnquest said there were likely to be many “scavengers” circling, seeking to pick up Baha Mar on the cheap for “cents on the dollar”, especially given that its construction is not yet complete and an opening remains many months away.

The FNM deputy leader added that it may be difficult to reconcile such ‘buyer’ positions with that of the China Export-Import Bank, Baha Mar’s $2.45 billion debt financier, which wants to recover 100 per cent of what is owed to it.

Bridging both sides’ respective positions to arrive at a deal acceptable to all, Mr Turnquest warned, might take some time.

Tribune Business revealed on Friday how the joint provisional liquidators, Bahamian accountant Ed Rahming and the US-based Alix Partners duo, Alastair Beveridge and Nick Cropper, last week informed Baha Mar’s suppliers that they remained in office.

Although the trio may seek Supreme Court permission to change their powers, they added that they were carrying out the duties handed to them by the Supreme Court on September 4.

They also, though, painted a somewhat confusing picture by suggesting that they remained in control of the seven Baha Mar companies placed into provisional liquidators, while Deloitte & Touche is now responsible for the companies’ assets.

This was confirmed by Deloitte & Touche in its own press release on Friday, in which it said it had been appointed as “joint receiver-managers over all the assets, property and undertakings” for nine Baha Mar companies.

These companies include the seven entities that were under the supervision of the joint provisional liquidators, plus Baha Mar Entertainment Ltd and Baha Mar Operating Company Ltd. These two have also been placed in the receivers’ care because they, and their assets, are security for the China Export-Import Bank’s loan.

“That’s crazy. It seems confusing to me. How does that make sense?” Mr Turnquest asked of the seeming ‘competition’ between the receivers and joint provisional liquidators over who was caring for Baha Mar.

“To understand there is some kind of joint receivership, and that the joint provisional liquidators have not been displaced, just adds another ball of confusion to the situation.”

Mr Turnquest added: “This is further evidence of the fact that this whole chain of decision-making by the Government was not well thought-out. The receivers should have been in as the first step.

“When they decided they were not going to accept Chapter 11, they should have applied for the appointment of receivers in the Bahamas, which would have given an opportunity for the bank and the receivers to find funding and investors to bring it to completion.”

Tribune Business understands that the China Export-Import Bank has long wanted to appoint its own receivers for Baha Mar, given that the developer had defaulted on the loan facility terms - the Chapter 11 filing itself being an act of default.

However, it baulked at doing so for fear of violating US court orders stemming from Baha Mar’s Chapter 11 bankruptcy filing. Ultimately, that obstacle was removed by the Delaware Bankruptcy Court’s decision to remove the protection enjoyed by Baha Mar’s 14 Bahamian companies.

Still, two sets of receivers/liquidators charging two different sets of fees hardly seems to fit with the core mandate given to both - that of safeguarding, maintaining and preserving the value of Baha Mar and its assets.

And it may also cause confusion among potential Baha Mar purchasers over which group to deal with.

Many observers had felt that with Deloitte & Touche’s appointment as receivers being approved by the Supreme Court, the joint provisional liquidators’ assignment would come to an an end once a ‘transition’ period and hand over to the new custodians was completed.

Tribune Business sources close to the situation said that while this was one likely option, “some other people may have other ideas”.

This newspaper was also told that China Export-Import Bank finally moved on appointing its own receiver was because it was unhappy with the joint provisional liquidators.

It felt they took too long to dismiss the more than-2,000 Baha Mar staff, and was also unhappy with the fees being levied.

Mr Turnquest, meanwhile, said the task of reviving Baha Mar had been made extra difficult by the use of the word ‘liquidation’, even though the joint provisional liquidation did not amount to a full winding-up.

And he suggested that it may be harder to bridge the gap between the China Export-Import Bank and potential Baha Mar investors than the Prime Minister is letting on.

“There will be, I’m sure, a lot of scavengers looking around to see what’s available and what they can pick up for cents on the dollar,” Mr Turnquest told Tribune Business. “I’m sure there are investors around looking to pick it up at a fire sale.

“But the bank wants to be made whole. I imagine that’s not an easy situation, even if there are people, as the Prime Minister indicated, eager to invest. It’s not going to be an easy overnight situation. There’s a lot of work to be done between a statement of interest and an actual agreement.”

The FNM finance spokesman warned that the Bahamas would be in “for a long haul” over Baha Mar unless the China Export-Import Bank decided to finance the project to a construction completion and opening.

With the development in receivership/joint provisional liquidation, and $600 million likely needed to complete construction, finding other financiers/investors to take over Baha Mar immediately will be a tall order.

Mr Turnquest said “the most reasonable guesstimate” was that the China Export-Import Bank will re-engage China Construction America (CCA) and seek to finance Baha Mar’s completion.

It is then likely to ‘hold’ and own the development for a while, operating it via hotel, brand and management partners, to see whether it can turn a profit and add value to any purchase price.

Deloitte & Touche in its statement said the receivers, Bahamas managing partner, Raymond Winder, and two accountants from its Hong Kong office, would keep Baha Mar’s entities operating if they “saw fit”.

It added that they would supervise Baha Mar’s completion “ f considered appropriate”, and consider the possibility of selling it to an investor ‘as is’. In other words, all options are on the table.