The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s joint provisional liquidators last night confirmed they had secured funding to pay the September salaries for the 2,400 non-Melia staff, while also pledging to meet all employee benefits due since their September 4 appointment.

Bahamian accountant Ed Rahming, and his UK colleagues, Nick Cropper and Alastair Beveridge, did not disclose the funding source that would have had to generate an estimated $5.5 million to cover monies due to Baha Mar’s Bahamian staff. Mr Rahming did not return a Tribune Business e-mail seeking clarification on that before press time.

However, given the speed with which the funds were received, they are likely to have come from the remaining balance of the $21 million that the Government owed Baha Mar for the West Bay Street re-routing and associated infrastructure works.

Sarkis Izmirlian, Baha Mar’s chairman and chief executive, hinted that this was the likely source in his last letter to employees on Friday.

““The company is facing a continued liquidity crisis,” he wrote. “I know the liquidators are working hard on getting the Government of the Bahamas to transfer the balance of the roads money that is owed to Baha Mar, as well as securing further funding.

“Without further funding, the company will not be in a position to make further payroll or pay the expatriate salaries that are now overdue since last month.”

The joint provisional liquidators’ letter to staff last night confirmed they “have been successful in securing sufficient funds to enable them to meet employee payroll obligations due in respect of the period from the date of their appointment.

“This will mean that for the payroll due to be paid this week, employees who are paid on a monthly payroll cycle will receive payment for the period 4 September to 30 September, 2015, a period of 27 days,” they added, “and employees paid on a bi-weekly payroll cycle will receive payment due in respect of the two week period 7 September to 20 September, 2015.”

Mr Rahming and his colleagues also promised “to meet all employee benefits, including pension entitlements, accruing from the date of their appointment onwards. The provisional liquidators will also be taking steps to ensure that existing medical insurance coverage is maintained.

“Employee benefits which have accrued but are unpaid in relation to the period prior to September 4, 2015, will remain outstanding until additional funding can be secured.”

The joint provisional liquidators’ letter, and accompanying press release, was also unclear as to whether Baha Mar’s expatriate staff had been paid - something that would have added $1.7 million to the payroll, bringing it to $7.2 million.

While the Government was always likely to fund the September payroll, given that it still possessed some of the ‘roads funding’, this is now likely exhausted.

This will likely leave the joint provisional liquidators with the difficult task of raising funding for October’s payroll should no commercial resolution to the $3.5 billion project dispute between the Chinese, Mr Izmirlian and the Government be reached by then.

The Christie administration’s legal filings in support of the Baha Mar winding-up petition, in any event, make clear that the Government sees no role for the developer in the project’s construction completion and opening.

Those submissions openly stated that the Government planned only to talk to the China Export-Import Bank, Baha Mar’s $2.45 billion financier, and China Construction America (Bahamas), as contractor, over proposed solutions for the project’s completion.

In the absence of a resolution, it will be interesting to see whether the Government, having effectively set a precedent, continues funding Baha Mar’s payroll through October as it will have to use taxpayer dollars no longer earmarked for the developer to do so.

Or will the Chinese ‘step up to the plate’, given that Baha Mar’s status means no financial institution or lender would go near providing the necessary funds.

The joint provisional liquidators, meanwhile, said salaries and benefits for Melia employees would continue to be paid from that hotel’s operational cash flows.

The employees affected by yesterday’s announcement work for for Baha Mar Ltd, Baha Mar Land Holdings Ltd, Cable Beach Resorts Ltd, Baha Mar Enterprises Ltd, BMP Three Ltd, Baha Mar Properties Ltd and BMP Golf Ltd.