The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s $2.45 billion lender yesterday said the developer had contractually committed to financing any cost overruns on the project, and it was not obligated to provide further money.

The China Export-Import Bank, in a statement released yesterday, still hinted it was prepared to go beyond contractual obligations and provide extra financing provided a resolution to the dispute could be found.

And it urged the other parties, who include Sarkis Izmirlian as the developer, China Construction America (CCA) and the Government, “to show sincerity and negotiate in good faith”.

Describing Baha Mar as “one of the major overseas projects” it has financed, the China Export-Import Bank acknowledged that two completion dates for the $3.5 billion project - December 2014 and March 27 this year - had been missed.

It added, though, that it had no obligation to provide any extra financing beyond the original $2.45 billion, even though proposed resolutions for Baha Mar’s completion saw it agree to provide 50 per cent of the funds needed - provided it was fully guaranteed by Mr Izmirlian and the contractor.

The bank then said: “Pursuant to the finance documents signed among China Export-Import Bank, Baha Mar Ltd and certain of Baha Mar’s affiliates, China Export-Import Bank has no obligation to provide this additional required funding.

“On the other hand, Baha Mar Properties has contractually undertaken to fund all cost overruns to complete the project.”

This seemingly gives the Chinese further ammunition to use against Mr Izmirlian should all parties return to the negotiating table.

Sources familiar with the situation yesterday suggested that Baha Mar’s financing needs now total $600 million, both to complete construction and repair existing problems, and carry the resort to opening - including sales and marketing efforts to repair the damage done by the dispute

Tribune Business also understands that the joint provisional liquidators, Bahamian accountant Ed Rahming and his UK colleagues, have already been reaching out to the warring Baha Mar factions, seeking to gauge their appetite for a negotiated solution and attempting to schedule talks.

Meanwhile, commenting following the dismissal of Baha Mar’s Chapter 11 bankruptcy protection cases, China Export-Import Bank said it was “surprised and disappointed” that Baha Mar sought the Delaware court’s protection without giving it prior notice.

However, Chapter 11 filings have to be done with maximum secrecy, so as to ensure creditors such as China Export-Import Bank do not attempt to block such moves.

“China Export-Import Bank appreciates that Baha Mar and its directors owe duties to various stakeholders, and respects their right to take appropriate action to protect Baha Mar,” the bank added.

“However, China Export-Import Bank’s view is that the project’s outstanding issues could not be resolved through Chapter 11. Thus China Export-Import Bank sought to have the Chapter 11 cases dismissed.”

China Export-Import Bank pledged to work with the joint provisional liquidators “to find the best possible solution for Baha Mar”.

“China Export-Import Bank remains supportive of the project and considers that a consensual solution remains the best outcome for all stakeholders of Baha Mar, and also the Bahamas generally,” it added.

“In order to achieve such an outcome, all stakeholders will need to show sincerity and negotiate in good faith.”