By KHRISNA VIRGIL
Tribune Staff Reporter
BAHA Mar developer Sarkis Izmirlian should rethink his proposed plan to remove China Construction America (CCA) as the general contractor for the mega resort, a prominent analyst has suggested.
Gowon Bowe, partner at PricewaterhouseCoopers, said with the West Bay Street project around 97 per cent complete, it was important for resort executives to weigh the implications of contracting a new firm.
Mr Bowe, who is also chairman of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), said a new firm would most likely create further delay where such circumstances need not exist.
In court documents filed last week, it was revealed that Baha Mar’s proposed bankruptcy reorganisation calls for the rejection of its construction contract and all other claims with CCA and its parent company China State Construction Engineering Corporation (CSCEC), in a bid to restructure the stalled mega-resort.
Mr Bowe said: “It’s best to get Baha Mar opened and fight whatever battle that needs to be fought in the courts after the fact. Otherwise it is not benefiting the economy. If the resort is now 97 per cent complete, a new contractor would need time to get acquainted with all the intricacies of all the systems which are already in place.
“So I am of the position that the existing contractor and Baha Mar should seek, along with the other parties involved, resolution. I would say it is not surprising that Baha Mar has taken this position, but it is one they always held. But when you look at all parties, they all have made mistakes so there is no one that comes with clean hands, but it is more important to reach compromise. Business makes odd bedfellows so when you look at the equity of all parties, tremendous investments were made and they all need to think about how to salvage instead of damage.”
The government first eyed Mr Bowe, along with two other officials from his firm, as the potential liquidators to be appointed by the Supreme Court to oversee the resort.
However, at the end of July, it was revealed in court that CCA contested this move. The government has since approached officials from Ernst and Young (Bahamas) to become the potential liquidators.
The Supreme Court is expected to make a decision on the government’s winding up petition against Baha Mar on September 4.
According to court documents, Baha Mar’s new restructuring plan would negotiate directly with CCA’s sub-contractors to reconcile claims if CCA failed to remit payment, but added that any distributions on account of the claims would be made at the sole discretion of the debtors.
The resort insisted that Bahamian creditors would be paid in the “ordinary course of business” once the Chapter 11 reorganisation plan filed last week in a Delaware court by the resort and its 14 affiliates was implemented.
The plan was described as the best available alternative to allow for the quick resumption and completion of the project’s construction.
According to the court documents, it takes into consideration the value of the $3.5bn Cable Beach project as a long-term business that was tied to the economic welfare of the country.
“Once completed,” the plan read, “the project is projected to generate nearly 5,000 new jobs and have an annual payroll in excess of $130 million, representing 12 per cent of the Gross Domestic Product of the Bahamas.
“Most notably, the plan does not impair the legal or equitable rights of Bahamian creditors or the government of the Bahamas, whose claims will simply ‘ride through’ the Chapter 11 cases.”
It continued: “The debtors submit that timely confirmation of the plan is unequivocally in the best interests of their creditors and estates.”
This is not the first time that the resort has sought to sever ties with its general contractor.
In July, Mr Izmirlian made a $200m proposal to Baha Mar’s Chinese lender to drop CCA and use Bahamian contractors to complete the project.
On June 29, Baha Mar and 14 of its affiliated companies filed for bankruptcy in a Delaware court, blaming CCA for the construction delays that caused it to miss previous opening deadlines.
The resort also took legal action against CCA’s parent company in the English High Court.