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D’Aguilar: Baha Mar Deal May Hit Atlantis ‘Viability’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A key Sarkis Izmirlian ally yesterday expressed fears that Atlantis’s “commercial viability” could be undermined if the Baha Mar agreement paves the way for China to dominate the Bahamian hotel industry.

Dionisio D’Aguilar, a former Baha Mar director, told Tribune Business that the China Export-Import Bank’s desire to be ‘made whole’ would likely result in the Cable Beach-based development being acquired by a Chinese buyer.

Together with China Construction America’s (CCA) ownership of The Pointe and British Colonial Hilton, Mr D’Aguilar said this could potentially give Beijing government-owned entities - and private groups beholden to it - control of a significant portion of Bahamian GDP.

While acknowledging that the agreement between the Government and Baha Mar’s main creditor might deliver “short term” benefits, in terms of the project’s physical completion and payment of Bahamian creditors, Mr D’Aguilar expressed misgivings over the long-term consequences.

He added that the Chinese could use their domination of New Providence’s hotel product to drive down room rates and prices, thereby imposing a commercial squeeze on Atlantis and other rivals, who lacked the same financial means to respond.

Explaining why, after some consideration, he was unhappy with the Government’s agreement with the China Export-Import Bank, Mr D’Aguilar told Tribune Business: “You have basically signed away Cable Beach to an entity that does not operate with the same normal democratic norms that we do.

“They have no shareholders to report to, they’re not motivated by profit, and their management executives are not subject to elections. It’s basically a dictatorship. They’re not culturally the same as us.”

“Think about it long-term,” Mr D’Aguilar added. “In the short-term, you get things moving. But long-term, when you it trouble, they will run you because they own such a large portion of your GDP and hotel product.

“They can reduce prices, drive down the quality of the tourism product, and threaten the commercial viability of Atlantis and any other major hotel project here. They can drive every other company out of this market, and scare off investors from coming into a market where there’s a player not motivated by profit.”

Mr D’Aguilar is not the first to raise fears that China could use its extensive hotel ownership interests to impose a ‘price squeeze’ on Atlantis and other companies, similar concerns having been previously expressed to Tribune Business by former deputy prime minister, Brent Symonette.

The former Baha Mar director added that these concerns were exacerbated by the fact that the project’s ‘buyer’ was likely to be a Chinese entity or group, given that they were the only candidates likely to meet the Export-Import Bank’s demand to be ‘made whole’.

With Baha Mar’s $2.45 billion secured creditor having agreed to finance the development’s completion, Mr D’Aguilar said that anywhere between $600 million-$1 billion could be added to the purchase price, pushing this towards the $3.5 billion level.

And he suggested that potential Chinese buyers, such as the Fosun Group, were deeply connected to both the Beijing government and Chinese communist party.

“Are we playing Chinese checkers here, where we are moving it from one balance sheet to another,” Mr D’Aguilar asked of Baha Mar’s fate.

“The only people who are going to pay, if the bank wants to be made whole to $3.5 billion or whatever they want, is another Chinese company my gut tells me. Playing Chinese checkers is not a good deal; not a good deal at all.”

Some cynics, though, will likely argue that it was Mr Izmirlian and Baha Mar themselves that set this in motion by bringing in the Chinese as the project’s financiers and contractors back in 2011.

Not wishing to “rain on Mr Christie’s parade” or appear “a sore loser”, Mr D’Aguilar said he, like every other Bahamian, wanted to see Baha Mar completed and open given the tremendous economic benefits it promises to deliver.

He acknowledged that it was also positive that the Bahamian contractors, former Baha Mar staff and other local creditors had been promised by the Prime Minister that they would be paid, although both the dollar figures and percentages remain unknown.

However, detailing the second of his three reasons as to why the agreement was “bad for the Bahamas”, Mr D’Aguilar told Tribune Business that Mr Izmirlian’s removal had “cut the soul out of the project”.

“Who’s running this project now,” he queried. “You have some soulless bureaucrat from the Chinese bank running it. You don’t have that passion, vision and drive from a developer like Sarkis Izmirlian.

“What makes all successful developments is that they have a developer there, driving it. You’ve cut the soul out of this project. There’s no passion now.”

The China Export-Import Bank and its Deloitte & Touche receivership are still pursuing buyers for the Baha Mar, with Prime Minister Perry Christie still hoping that a deal can be sealed, and the property’s key assets open in time for the late 2016-2017 winter season - an outcome most informed observers view as unlikely, if not impossible.

Mr D’Aguilar, though, argued that the move by the receivers/Government and their attorneys to successfully persuade the Supreme Court to ‘seal’ all details of the agreement suggested there were some specifics they wanted to hide.

“It lacks transparency,” he charged. “We don’t see what they had to give up to get $70 million for the contractors and open the project. They don’t want us to see it because obviously they’re probably embarrassed.

“They took the bits of the deal they liked and revealed those, and those they didn’t, they subjected to a veil of secrecy.”

The Christie administration has vehemently denied all this, and has pledged that details of the agreement with the China Export-Import Bank will eventually be made public in due course, although no specific timeline has been given.

However, Mr D’Aguilar concluded: “This agreement that Christie and his group have put together is a really bad deal for the Bahamas.

“It’s good that the creditors will get paid, but I don’t see any other positives coming from it. They can run on about it all they want, but it’s a bad, bad deal.”

Comments

birdiestrachan 1 year, 9 months ago

How is it that he knows it is a bad deal, when he does not know what the deal is in the first place.? The man's mouth is racing ahead of his brain. I am wondering how much was he paid by the former owner of the project ??and if this is his reason for all the gloom? His mouth is going 100 miles per hour. while his brain is in park. He says he can not even find Bahamians to manage his wash houses . and he talks.

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banker 1 year, 9 months ago

Two things birdie. First, the secrecy behind the deal is very interesting because (1) there is no buyer to monitor the finishing of the construction and they have proven that they are shoddy workers who cannot complete anything on time, and (2) we know that PM Crisco Butt is a serial liar and a narcissist. He has mislead the Bahamian public continuously especially during this tenure. Remember the "dead good news" a year ago?

Secondly, if have had the privilege of touring the warehouse of Mr. D'Aguilar, the first thing that greets you in the ground floor, is a plethora of destroyed token activators by employees who try to illegally extract tokens and either sell them or give them to their friends. In the process, they wreck them. This destruction happens with the complicity of "Bahamian supervisors". This damage happens in spite of Mr. D'Aguilar being an exemplary employer, giving his employees loans and helping them out in their time of need. I know this for a fact. So when you spew your little hateful birdsh*t on these fora and take your own brain out of park, please take an anti-stupid laxative before you touch the keyboard. Here's hoping that Jesus can cure your imbecilic rants. God Bless You.

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Weezie 1 year, 9 months ago

Why do you always shoot the messenger rather than address the content of his message? Every time I read your comments, it is always same bulls**t. The PLP must really have you drinking their kool-aid. If you do NOT agree with his comments, say why! I guess that would require you to use your brain which, while D'Aguilar's, according to you, is in park......yours definitely is in reverse.

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Well_mudda_take_sic 1 year, 9 months ago

Say what you may, at the end of the day the indigenous Bahamian composition of Baha Mar's board failed the development in a fatal way. As Vince probably would have put it: "The younger Izmirlian no doubt has learned a painful lesson on how important political capital is to such an enormous project - it's not just about finance, but significant political relationships matter too!". Baha Mar's board from day one should have had on it two or three highly successful Bahamians who had earned their political capital, wealth and standing in society the old fashion way. Instead it got the likes of the white haired poodle with his inherited wealth topped off with "a name dropping" university education. I remain confident though that the annals of history will not be kind to the likes of the noisy white haired poodle when it comes to documenting the primary reasons behind the failure of Baha Mar. The yapping poodle has simply always been lacking in the necessary political capital!

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Reality_Check 1 year, 9 months ago

Re-post: The white haired poodle is indeed an annoying yapping antagonizer lacking in political clout. If throwing him a bone to chew on does not help quiet him down, then he may need instead a good dowsing of highly effective flea powder. His over-sized Cornell fed ego occasionally gives him an incredibly irritating itch resulting in spontaneous fits of yapping!

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banker 1 year, 9 months ago

Hmmmm. Two accounts -- one person? Enmity like this means something personal, otherwise it would be just a ho-hum. How did he screw you over?

What you don't realise is that Neil Hartnell writes business reports by phoning up a group of people who take his calls, and that's the NEWS of the day.

This is all rather hilarious, because one thing that you can count on from Dionisio. is the straight goods. He calls a spade a spade even when it is politically inadvisable to do so. Of course it helps to have the armour of wealth and have a business that Bahamians rely on.

You een hurtin' his feelings by calling him names.

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Weezie 1 year, 9 months ago

Banker....you so right! And to those PLP kool aid drinkers, please stop! Political capital.....who wants to be a business where you have to bow and scrape to our inept, overly corrupt political masters (especially this PLP government) who have proven they cannot run a s**t show let alone the country.
Since the PLP have been in power, Moody's has downgraded us 3 times: A3 to Baa1 (Dec 2012), Baa1 to Baa2 (Sept 2014) and Baa2 to Baa3 (August 2016).

Why do we keep getting downgraded........because Moody's recognizes that Perry and his bunch of gangsters are running the country into the ground....and you want the likes of D'Aguilar to come hat in hand to them.
D'Aguilar was just misguided into thinking that Perry and the clowns in his Cabinet would have a business head and see that getting rid of the devious, evil, crooked China State Construction (CCA) was the solution. Instead they backed CCA and look how CCA is screwing Perry now. I hear they have walked off the job downtown, stopped the project cold, until Perry pays up the MONEY.......sorry, gives them more concessions. Brother D'Aguilar.....keep talking!

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