The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s contractor has promised to complete its assessment of the work necessary to complete the $3.5 billion resort development within seven days, Tribune Business was told yesterday.

But, while China Construction America (CCA) has “reserved the right to charge” the joint provisional liquidators a fee for this work, it has yet to do so.

And sources close to the joint liquidation team of Bahamian accountant Ed Rahming, the KRyS Global (Bahamas) partner, and the UK duo of Nick Cropper and Alastair Beveridge, denied that CCA (Bahamas) was seeking a $0.5 million fee for completing the assessment - as had been alleged to this newspaper by several sources close to developments at Baha Mar.

“They started today, and are confident of getting it done in seven days,” one contact told Tribune Business of CCA (Bahamas) analysis work.

The Chinese construction company is assessing the amount, nature and value of construction work that needs to be completed before Baha Mar’s construction can be finished and the project open.

It is also assessing the impact of the six-month construction hiatus caused by the dispute between CCA and the developer, and Baha Mar’s Chapter 11 filing, looking for additional damage caused by mould, water invasion , vandalism and other deteriorations caused by the resort properties sitting empty.

This newspaper, though, was told that the findings of CCA (Bahamas) analysis would not be taken at face value or without question, and that they would have to be verified by an independent quantity surveyor.

The construction assessment is critical to the joint provisional liquidators’ efforts to mediate a solution to the Baha Mar impasse between developer Sarkis Izmirlian, CCA, the China Export-Import Bank as secured debt financier, and the Government.

Only when this is completed will the warring parties know how long it will take to complete the $3.5 billion project, and how much it will cost. Thus the assessment is the first step towards kick-starting negotiations on how Baha Mar’s completion will be financed.

Previous estimates placed this figure at between $300-$600 million, with proposals suggesting 50 per cent of this sum should come from the China Export-Import Bank (fully guaranteed by Mr Izmirlian and the contractor), and the latter two providing 25 per cent of the balance each.

The Government, and possibly the Chinese, appear to be contemplating Baha Mar’s completion without the assistance or involvement of Mr Izmirlian, meaning the bulk of the financing will likely have to come from China.

A press release from the joint provisional liquidators yesterday sought to prevent CCA (Bahamas) return to the construction site as a much-anticipated breakthrough”, although it largely represents the contractor fulfilling what it has publicly promised - that it is prepared to remobilise and complete Baha Mar in the shortest possible time.

Mr Beveridge, speaking for the joint provisional liquidators, said: “We’re delighted to be working alongside CCA. Their role here is extremely important and together we will now assess what needs to be done, and how long it will take, in order to complete Baha Mar such that it may open its doors to the public and introduce thousands of new visitors to the Bahamas.

“The work that we will now jointly undertake will inform the next round of talks with all parties. Those talks will take place in due course following the completion of our assessment.”

Sources close to Mr Izmirlian, though, yesterday suggested that the CCA (Bahamas) announcement and assessment was effectively a ‘PR showcase’ that amounted to less than what it was billed as.

They questioned why CCA needed to do an assessment when Baha Mar was supposedly 97 per cent complete, and when it had promoted itself as the only entity which “knows the project” and could complete it in the shortest time possible.

Mr Izmirlian had wanted to dump CCA (Bahamas) as the main contractor had his legal manoeuvrings been successful, and yesterday there were indications that the hostility had not abated.

Contacts familiar with the developer’s position also questioned how the Bahamian people and joint provisional liquidators could have any confidence in CCA (Bahamas), given that it had missed two previous Baha Mar opening deadlines, and failed to complete on time and on budget.

Meanwhile, Mr Rahming and his UK colleagues have conceded that Baha Mar has defaulted on the loan terms with the China Export-Import Bank.

They are, though, effectively asking the bank to ignore this in seeking a further $8.738 million loan from it to cover Baha Mar’s insurance premiums that become due on Monday (see other story on Page 1B).

In their request for the extra financing, the liquidators acknowledge that accrued interest on the China Export-Import Bank’s $2.45 billion credit facility is past due and unpaid, creating an ‘event of default’.

The trio acknowledged that their own appointment was a default, and that providing the $8.738 million may breach the stipulated 7:3 debt-to-equity ratio for the Baha Mar project.

Warning that it is “possible that there is an outstanding cost overrun” on the development, the joint provisional liquidators asked the bank to waive all these breaches apart from requiring the loan to be approved by the Bahamian Supreme Court.

The defaults would potentially allow the China Export-Import Bank to enforce its debenture security over Baha Mar’s assets and appoint its own receiver, plus seize 5.1 million Baha Mar Ltd ordinary shares that were pledged as further collateral. So far, it has taken neither step.

Tribune Business was also informed that the September salaries for 2,400 Baha Mar staff were paid from assets under the provisional liquidators’ control, including the $9.5 million balance owed by the Government on the road re-routing, which was transferred to their control this week.

This newspaper was also informed that Baha Mar’s expatriates received their salaries, too, along with Bahamians, as the provisional liquidators are not discriminating on the basis of nationality.