The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Baha Mar director has urged Prime Minister Perry Christie to keep the pressure up on the $3.5 billion project’s lender, as he argued: “The Government backed the wrong horse.”

Dionisio D’Aguilar, responding to China Export-Import Bank’s assertion that it was not to blame for the development’s fate and slow progress towards a resolution, said Baha Mar’s current ‘standstill’ was a product of the Government’s winding-up move.

“My only comment is to say the Government wanted provisional liquidation and winding-up, and this is what they have,” Mr D’Aguilar told Tribune Business.

“You have a bank that is uncertain and unable to move quickly, and they will take a long time to make a decision. Nothing is ever straightforward with them.

“There’s a host of people that have to get involved in decision-making, and there’s a 13-hour time and thousands of miles between here and China. They’re not feeling our pain like we’re feeling the pain,” he added.

“It’s a big bloody mess. It’s a mess that gets worse and more complex by the day.”

Baha Mar’s $2.45 billion lender, in a statement sent to Tribune Business last week, slammed “entirely unfounded” suggestions that it was responsible for the project’s demise.

It added that it was “more eager” than anyone else to resolve the $3.5 billion development’s fate because its value was “declining with each passing day”.

But the bank also again indicated that there may be a ‘long work out’ before the project’s future is resolved, pointing out that its sheer scale “takes time to market”.

Its statement gave no hint that the search for a purchaser may be close to completion, suggesting that Prime Minister Perry Christie’s “optimism” that a resolution may soon be in sight is unfounded, especially since it made no mention that it had decided to finance Baha Mar’s completion itself.

Mr Christie has written several times to the China Export-Import Bank, urging it to move more rapidly - an action that Mr D’Aguilar backs.

“I encourage the Prime Minister to keep putting the pressure on for the good of the country,” he told Tribune Business. “He has to keep putting the pressure on.

“But I will say it again: Winding-up and provisional liquidation show failure. Reorganisation and refinancing says continuity and a chance to bring the project back.

“The Government backed the wrong horse. This is what they wanted to do; the path they wanted to take. It was going to be quicker, have more haste, swiftly be open by Christmas, and this is contributing to the failure with the project,” he added.

“If the directors of Baha Mar were allowed to take it through Chapter 11, funding would have been in place to rescue it, and it would have been moving forward. It would have been moving forward from last year, and the place would be open.

Those assertions are debatable, given that Baha Mar’s original developer, Sarkis Izmirlian, had yet to secure new financing to take the development forward when the Delaware Bankruptcy Court threw out the Chapter 11 protection last year.

Government support for Mr Izmirlian/Baha Mar would probably not have prevented that outcome, given that the case - and defeat of the Chapter 11 recognition bid in the Bahamas - were both won by the China Export Import-Bank and the contractor, China Construction America (CCA).

It might, though, have forced CCA to negotiate more ‘in good faith’ with Mr Izmirlian, and helped broker an out-of-court settlement to get Baha Mar moving again.

“I always said the bank would not be able to sort this out quickly. It’s no surprise what they said,” Mr D’Aguilar added of the China Export-Import Bank’s statement.

“They’re absolutely right; it’s a complex project and, as time goes on, unfortunately the asset diminishes and the size of the write-down they will have to take increases.

“Every time the write-down increases, there’s a need to mull, consider and reconsider.”

Given that the China Export-Import Bank is ultimately owned by the Beijing government, Mr D’Aguilar said politically-related decision making could weigh heavily in what it ultimately decides to do with Baha Mar.

“It’s not like there’s a clear decision maker,” he told Tribune Business. “You don’t know how far up the political directorate in China this goes up.

“Bureaucrats don’t make a decision quickly. Everyone’s scared of failure. There’s no one wanting to make a decision and take responsibility for it.”

Mr D’Aguilar argued that, in contrast, Mr Izmirlian would have been far better placed to make a decision “in the best interests of the company” and Bahamian people if he had been left in place.

The China Export-Import Bank last week said it was not insensitive to the economic and social fallout in the Bahamas that had resulted from the $3.5 billion development coming to a standstill.

“China Ex-Im Bank is fully aware of the importance of the Baha Mar project to the Commonwealth of the Bahamas and the people of the Bahamas,” its statement said.

“The China Ex-Im Bank is a responsible bank. When it takes actions and makes decisions, the bank bears in mind not only its own interests but also the interests of the Bahamas and the Bahamian people.”

The China Export-Import Bank also confirmed Tribune Business’s exclusive revelation that Bahamians have fallen further down the Baha Mar creditors queue as a result of the $50 million loan extended to Deloitte & Touche to cover costs associated with preserving and maintaining the resort assets.

“During this process, the receiver/managers had to undertake huge expenses arising from project maintenance by arranging loans, and the Bank had to agree to allow these loans to take priority to the bank’s debt upon any sale of the property,” Baha Mar’s financier told Tribune Business yesterday.

This newspaper reported on December 4 last year how the $50 million injected by China Harbour Engineering Company (CHEC) was not only a loan that must be repaid, but is also a ‘preferential’ financing that now ranks ahead of all other creditors.

The effect of its $50 million loan is to drop all Baha Mar’s Bahamian creditors - contractors, the 2,000 laid-off staff and other local suppliers - further down the creditors’ queue, reducing an already-remote chance they will receive something, let alone 100 per cent, of what is due to them.