By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Opposition’s deputy leader yesterday questioned what was “so sensitive” in the agreement for Baha Mar’s construction completion that required the court file to be sealed, amid indications full details will not be revealed until the project has been sold.
K P Turnquest suggested numerous theories for why the Christie administration, and the two Chinese government-owned entities, might want to keep the agreement reached on Monday night shrouded in secrecy.
Among them were whether the incentives and tax breaks offered to the China Export-Import Bank and China Construction America (CCA) breached the Most Favoured Nation (MFN) status enjoyed by Atlantis, which requires that it be treated no less favourably than any other investor in the Bahamas.
And, in a statement released yesterday evening, a ‘think-tank’ associated with the governing Progressive Liberal Party (PLP) suggested it may be many months before the Bahamian people get a full understanding of the deal struck on their behalf to both complete the $3.5 billion (now probably $4.5 billion) project and compensate local creditors.
The New Progressive Institute, responding to criticism by radio talk show hosts, said of the agreement: “It has been sealed until the liquidation and final sale/purchase agreement is completed by the bank and the prospective buyers.”
This implies that Bahamians will only find out what their government has negotiated ‘after the fact’, or after the completion and sale of Baha Mar have been completed - almost certainly too late for anyone to do anything about it.
“It’s interesting that the Government called for the documents to be sealed,” Mr Turnquest told Tribune Business. “The question that comes to mind is what is there included in that which is so sensitive to developments at this point in time.
“Does the deal include anything that is inconsistent with the Most Favoured Nation status given to Atlantis? Does it have anything to do with the taxes and exemptions given up.... VAT, Business Licences and other fees that have been specified as part of this deal?
“It’s just again a mixed bag of proposals that have been put forward with no details. There seems to be uncertainty as to who gets paid and how much. I don’t make very much of it at all. There are too many agreed unknowns,” he continued.
“At this stage, it’s a wait and see. I don’t know if businesses can take too much comfort yet until such time as we see what is being put forward.”
Raymond Winder, Deloitte & Touche (Bahamas) managing partner, said the construction completion agreement had been sealed for reasons of ‘commercial confidentiality’.
And Wayne Munroe QC, who represents the Gaming Board and other government entities in the Baha Mar matter, yesterday suggested the ‘sealing’ was required to prevent Baha Mar’s original developer, Sarkis Izmirlian, from interfering with and trying to sabotage any resolution to the situation.
Mr Izmirlian and his BMD Holdings vehicle, in a statement issued yesterday, repeated the scepticism many have expressed over the agreement, reiterating that Bahamians had been left “without any specifics about a definitive buyer” or the purchase price that the China Export-Import Bank is seeking for Baha Mar.
Mr Izmirlian also pointed to the absence of “definitive guarantees that any unsecured creditors will receive any of the monies they are owed”.
Baha Mar’s original developer offered to make all unsecured Bahamian creditors and the China Export-Import Bank ‘whole’ in his last offer to the latter, but the Chinese have steadfastly refused to deal with him, suggesting he lacked the necessary financing.
Urging the Christie administration to produce specifics and details, particularly on how unsecured creditors will benefit from the deal, Mr Izmirlian/BMD Holdings added: “Of particular interest is both the scheme that has been concocted between China Construction America (CCA) and China Export-Import Bank, and the source of such payments when unsecured creditors who completed the work they were contracted to complete have yet to be paid or guaranteed payment.
“Despite the fact that CCA deceived the Prime Minister and the whole of the Bahamas over a year ago regarding its guaranteed completion of Baha Mar, they are permitted, and will be paid, to return to the project.”
Mr Izmirlian suggested that the agreement unveiled by Mr Christie backed his company’s bid to place Baha Mar into full liquidation, as this would give all creditors “a better opportunity of representation in order to protect their rights, and bring Baha Mar to a more constructive solution to the benefit of all Bahamians”.
And he reiterated: “We stand ready, willing, and able to move forward to complete Baha Mar.
“We call on the Government of the Bahamas and China Export-Import Bank to meet with us to bring the project to completion in a forthright manner deserving of the Bahamas.”
Tribune Business revealed on Wednesday how sources familiar with the agreement had suggested it was “a pretty fair deal” and “not pie in the sky”, and that the unsecured creditors would fare “quite well” in terms of what is owed to them.
However, doubts that all will be paid, or paid in full, have already surfaced. Larry Treco, president of CGT Contractors and Developers, told Tribune Business that while Bahamians contracted by CCA would be compensated, those hired directly by Baha Mar may not - or at least not get all that is due to them.
Documents filed at the time of Baha Mar’s Chapter 11 bankruptcy filing showed that CCA was the largest unsecured creditor at $75 million, although it was claiming to be owed around $120-$130 million.
Much of the sum owed to CCA was, in turn, due to the Bahamian contractors it hired as “subs”. Those firms are likely to be covered by Mr Christie’s assertion that the agreement requires CCA to “resolve” outstanding monies to these creditors.
However, Mr Treco’s comments raise questions as to whether his fellow contractor, Osprey chief Peter Whitehead, who was one of those to endorse the deal, will get paid in full.
For Osprey’s joint venture with Yates was shown in documents as a creditor of Baha Mar, not CCA, and owed around $5.3 million.
A further category not mentioned yet is those Bahamian contractors who were hired as ‘sub-contractors of foreign sub-contractors’.
This includes the likes of Cavalier Construction, a sub-contractor of US firm, Valley Crest, and which is owed a seven-figure sum, too. Given that foreign contractors are not included in the Baha Mar agreement, questions arise as to whether those in a situation like Cavalier’s will be compensated.
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