The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Prime Minister Perry Christie’s meeting with Sarkis Izmirlian yesterday achieved “nothing substantial” in attempting to resolving the $3.5 billion Baha Mar dispute, with the latter again demanding that his Chinese partners negotiate in “good faith”.

The Government was noticeably more upbeat in its assessment of the meeting, quoting Mr Christie’s description of it as “excellent”, while sources close to Mr Izmirlian and the development team suggested Baha Mar was “back where we started” in February/March 2015.

“We’re right back where we started all those months ago before the Chapter 11 filing,” one source familiar with the developer’s position told Tribune Business.

And, referring to the Government’s winding-up petition and appointment of the joint provisional liquidators, the source added of the Prime Minister: “All he’s done is take us back where we were.”

However, with the provisional liquidation team of Bahamian accountant Ed Rahming and his UK colleagues in control at Baha Mar, and the Chapter 11 proceedings for the 14 Bahamian-domiciled Bahamian companies dismissed, Mr Izmirlian is now in a much weaker negotiating position, and with very few cards left to play, following his loss of control over the project.

Some contacts suggested that yesterday’s encounter represented “a token meeting”, although it will have given the Prime Minister and Mr Izmirlian a chance to mend ‘broken bridges’ that were almost completely destroyed after June 29’s Chapter 11 bankruptcy protection filing.

Taking a much more cautious, downbeat approach than the Government, Mr Izmirlian largely reiterated a position he has maintained throughout the dispute - that the Chinese, especially China Construction America (Bahamas), must negotiate in “good faith” if a commercial resolution to their battle is to be found.

“I have made clear again that I cannot continue to be in the position of being the only hand clapping in any negotiations,” Mr Izmirlian said.

“What I stressed to the Prime Minister is that I continue to be ready and willing to negotiate in good faith to resolve the outstanding issues, and to act promptly on my part if such resolution can be achieved.”

Mr Izmirlian said he also reiterated his belief to the Prime Minister that the China Export-Import Bank was “the most instrumental party” for resolving the impasse, and he provided dates on which he was prepared to meet with its representatives.

Baha Mar’s $2.45 billion financier, though, has shown a marked reluctance to turn on its fellow Chinese conglomerate, not least because they share the same owner in the Beijing government. This makes it unlikely that the bank will intervene on Mr Izmirlian’s behalf in his ongoing fight with CCA.

“What I stressed to the Prime Minister is that I continue to be ready and willing to negotiate in good faith to resolve the outstanding issues, and to act promptly on my part if such resolution can be achieved,” Mr Izmirlian added.

“Time is of the essence. A plan to resolve the issues and enable Baha Mar to move forward needs to happen now. I expressed to the Prime Minister my grave concerns about the liquidation of Baha Mar. I believe the Prime Minister fully understands the issues from my perspective, and what I am willing to do to help resolve them.”

The Government, for its part, said it was happy that Mr Izmirlian had given assurances of his continued co-operation with the provisional liquidators, and his willingness to attend meetings they will organise in a bid to achieve commercial resolution of the $3.5 billion Baha Mar dispute

The Prime Minister said: “Mr Izmirlian, the China EX-IM Bank and China State Construction Company have all reiterated their desire and commitment to complete and open the Baha Mar resort as soon as possible.

“This continues to be the primary objective of my Government as well. We continue to urge all parties to conscientiously work towards a definitive settlement of their differences so that the interests of all stakeholders, especially the Bahamian contractors and employees, can be well and justly served.”

While all sides agree on the need to complete and open Baha Mar as rapidly as possible, as it is in their collective interests, and share a willingness to negotiate, getting them to a commercial settlement all can live with will be much more difficult.

For the root causes of the Baha Mar impasse, namely the dispute between Mr Izmirlian and CCA, are still burning as brightly as they were in spring 2015. And, in the meantime, there has been a complete breakdown of trust between the two sides.

Following the successful outcomes before the Bahamian and UK courts, it remains to be seen whether CCA will seek to ‘twist the knife’ and insist that Mr Izmirlian capitulate to all its demands in return for a deal, or simply ‘wait out’ the provisional liquidation and let Baha Mar be placed into a full ‘winding-up’.

CCA will likely demand that Mr Izmirlian drop all thoughts of dumping it as the main contractor; withdraw the $192 million lawsuit against its parent company in the UK; and that the developer fully guarantee any financing from the China Export-Import Bank.

Mr Izmirlian, for his part, will want to obtain a committed completion date from CCA and financial penalties that the contractor will incur for missing deadlines.

In short, he will want CCA to return to the pledges given in the ‘minutes’ of their November 14, 2014, meeting, given that he sees the contractor’s failure to complete on time, and on budget, as the source of all woe.

If he does not get this or an acceptable deal, the Izmirlian family will likely face a hard choice between whether to compromise or walk away from an $850-$900 million equity investment at Baha Mar.

Apart from Prime Minister Perry Christie, yesterday’s meeting was attended on the Government side by attorney general, Allyson Maynard-Gibson, and minister of state for investments, Khaalis Rolle. Also present was Cresswell Sturrup, permanent secretary in the Prime Minister’s office, and the director of investments.