The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Negotiations over the stalled $3.5 billion Baha Mar project have made “some progress on the way forward” towards a commercial resolution, Tribune Business has been told.

While all sides were tight-lipped on the outcome of last week’s meetings at the Melia Nassau Beach Resort, sources familiar with events suggested some headway had been made in resolving the differences between Baha Mar and its Chinese partners.

They emphasised, though, that no binding agreement had been reached, and much work remained to be done to achieve a commercial resolution before the November 4 winding-up petition hearing that would put the development into liquidation.

“There seems to be some progress,” one contact familiar with developments, speaking on condition of anonymity, told Tribune Business. “I think they’ve come up with a possible way forward.”

This newspaper understands that meetings between Baha Mar’s developer, namely Sarkis Izmirlian and his representatives, the Government, China Export-Import Bank and China Construction America (CCA) continued into Friday night.

Mr Izmirlian himself was present for “the substantive part of the meetings”, a further indication of their importance, given that he has not always been physically present himself at previous negotiations with the Chinese.

Still, despite the glimmer of optimism, one source told Tribune Business that an agreement on Baha Mar’s construction completion and opening remains a work in progress.

“I’m not sure how they will proceed from here,” they told this newspaper on the talks. “It’s not going to just finish on Friday night.”

The only official statement on last week’s talks to-date has come from Baha Mar’s joint provisional liquidators, the team of Bahamian accountant, Ed Rahming, and the UK-based Alix Partners duo, Alastair Beveridge and Nick Cropper.

They chaired the talks, which also included representatives from China State Construction Engineering Corporation, CCA’s Beijing-based parent.

“The talks this [last] week are another important step on the road to resolution. We would like to thank all parties for their good faith participation and constructive approach during the meetings,” said Mr Beveridge in a statement.

“Whilst there is still work to be done, it is clear that all involved are focused on quickly reaching a viable solution to ensure that the Baha Mar resort is able to open for business for the benefit of all stakeholders, including the Bahamian people. We will continue to work with all stakeholders as we explore the best route forward and will issue further updates as talks continue”.

Tribune Business was told that all official information on the talks will be coming from the joint provisional liquidators who, as agents of the Supreme Court, have been tasked with trying to devise a commercial out-of-court settlement to the Baha Mar dispute.

“I think that they’re encouraged by what has happened,” one source said of Mr Rahming and his colleagues. The joint provisional liquidators also last week failed to respond to several Tribune Business e-mails, indicating they want to keep the negotiations out of the public glare.

“They don’t want to be premature” in suggesting that a resolution to the Baha Mar impasse may be in sight was how one contact explained the situation.

The joint provisional liquidators’ appointment, and the dismissal of Baha Mar’s Chapter 11 bankruptcy protection filing in Delaware, have handed the negotiating advantage to the Chinese and the Bahamian government.

With his family’s $850-$900 million equity stake jeopardised by the November 4 winding-up hearing, Mr Izmirlian may be forced to choose between accepting a bad deal or losing 13 years’ worth of work and investment.

Baha Mar will likely have to abandon its goal of dumping CCA as the lead contractor, with the Chinese also probably pressuring it to drop the $192 million legal action against its parent in the UK.

And there will also probably be demands that Mr Izmirlian come through with the guarantee that China Export-Import Bank is demanding in order for it to cover 50 per cent of Baha Mar’s additional financing needs.

It also remains to be seen whether Mr Izmirlian is able to wrest from CCA a committed timetable for Baha Mar’s completion, along with penalties for missing dates and targets.

And it is uncertain whether the Chinese may simply ‘wait out’ the provisional liquidation process, in a bid to remove Mr Izmirlian, and look to seize the $3.5 billion project for themselves.