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Baha Mar: Two Firms Are On Shortlist

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Prime Minister Perry Christie.

By KHRISNA VIRGIL

Tribune Staff Reporter

kvirgil@tribunedmedia.net

AMID continued concern over the shuttered Baha Mar resort, Prime Minister Perry Christie revealed that two firms, one with ties to Bahamian investors, have been shortlisted as the court-appointed receivers of the project move closer to deciding which entity will acquire the $3.5bn West Bay Street development.

However, he said the final decision is solely at the discretion of receiver managers who are currently in Beijing, China negotiating a contract to remobilise and complete the project as soon as possible.

Mr Christie said China State Construction Engineering Corporation (CSCEC) along with the resort’s general contractor China Construction America (CCA), its subsidiary, are also participating in the talks.

He did not name the two shortlisted groups, but said neither involved developer Sarkis Izmirlian. He added that the government of the Bahamas was not privy to the content of the ongoing discussions in China.

“Mr Speaker, this is a matter which will require negotiations primarily with a new investor in this project who has yet to be decided upon by the China Export Import Bank,” Mr Christie said as he wrapped up debate on the 2016/2017 budget.

“The current position, I am understanding, is that two firms have been short listed, Mr Speaker.”

He further maintained that the government was not colluding with the Chinese to shun Mr Izmirlian, adding that it had not given economic citizenships as a concession to entice CSCEC and CCA to complete Baha Mar.

This, Mr Christie said, was “totally” false.

He also suggested that Fort Charlotte MP Dr Andre Rollins had incited xenophobia and ill will toward Chinese nationals when he spoke in the House of Assembly about Baha Mar last week. Last week Dr Rollins said if the FNM wins the next election, it reserved the right to void any agreement it did not think was in the country’s best interests.

Dr Rollins said he forcefully rejected Mr Christie’s suggestion.

Dr Rollins said: “The information from the prime minister is that I in some form or in some way stoked prejudice and xenophobia with respect to my commentary during the course of my budget communication. I would just like to forcefully and categorically reject the assertion made by the right honourable prime minister that I sought to insert prejudice or xenophobia in relation to this matter.

“The facts of the matter are notwithstanding everything that I have said as it relates to the intention of the Free National Movement government to promote the best interest of the people of the Commonwealth of the Bahamas and to promote sovereignty of this country, there has been no rejection or disagreement expressed by either the leader or the deputy leader (of the FNM) in so far as anything that I said.”

Legal Advice

Given the immense speculation regarding the government’s involvement in Baha Mar’s current state, Mr Christie read into the record of the lower chamber legal advice the government received from its international lawyers regarding Mr Izmirlian’s Chapter 11 Bankruptcy filing last June.

He was referring to advice from US law firm Hogan Lovells and UK firm Charles Russell Speechlys LLP.

The UK based attorneys pointed out that Mr Izmirlian was without funds and his promises of funding were without foundation.

“It is not disputed that the US Chapter 11 process can be a highly effective tool with which to enable a debtor to restructure its affairs in such a way that will ensure its future survival,” the memo from Charles Russell Speechlys, dated June 20, 2016, said.

“The Baha Mar companies had almost no cash reserves, no source of income and even if the reported sum of $600m could have been found to complete the works, there was no evidence that the substantial amount of working capital that would be required was in place to see the resort trade through to break even.

“The Chapter 11 process was a device (either whole or in part) designed to strengthen Sarkis Izmirlian’s hand in negotiations with CEXIM, CCA and the government of The Bahamas. The dismissal of the Chapter 11 process resulted in the loss of that hand.”

The memo continued: “Sarkis Izmirlian was invited back to the negotiating table and whilst he purportedly committed to making further funds available (up to $200m), the conditionality that he placed around that funding was untenable to CEXIM and/or CCA.”

Reading a memorandum from the US based attorneys, Mr Christie said their positions aimed to dispel confusion and explain his administration’s support for plans to complete Baha Mar. It was also dated June 20, 2016.

“The passage of time (since Judge Kevin Carey of the United States Bankruptcy Court for the District of Delaware dismissed the Chapter 11 cases filed in June 2015) and fading memories have left room for mistaken impressions about the short-lived Chapter 11 cases and what those cases could have been expected to accomplish,” Hogan and Lovells’ memorandum read.

“The Chapter 11 filings were preceded and followed by extensive negotiations among the Baha Mar debtors and their principal, developer Sarkis Izmirlian; CEXIM; and CCA Bahamas Ltd and CSCEC – negotiations in which the government sometimes participated. We did not participate in those negotiations, but it appears from the surrounding correspondence and drafts that the financial condition of Baha Mar debtors accurately reflected Mr Izmirlian’s ability to devote additional resources to the Baha Mar project. Although Mr Izmirlian repeatedly proposed to provide additional funding, that funding never materialised.

“The Chapter 11 filings offered the Baha Mar debtors and Mr Izmirlian short term tactical benefits – at a steep price.”

Hogan Lovells said the filings enabled the developer to temporarily retain control of Baha Mar rather than relinquishing control to independent liquidators or receivers.

The firm argued that had the Chapter 11 case continued, the filings would have enabled the Baha Mar debtors to assume or reject continuing contracts, deciding which to retain and which to discard generally leaving the counter parties to discarded contracts with nothing more than unsecured damage claims.

“Although Baha Mar debtors claimed that they filed the Chapter 11 cases ‘with the primary goal of putting the Baha Mar project on a firm financial foundation so that construction could be completed and the project opened to the public as soon as possible’ that claim was unrealistic, at best.

“The plan was nothing more than a hypothetical construct, depending on the availability of hundred of millions of dollars of exit financing that the Baha Mar debtors stood no chance of obtaining,” the US law firm said.

“The developer of a partially completed real estate project can ill afford any protracted dispute with its secured lender unless the project can be refinanced from other sources. Notwithstanding Sarkis Izmirlian’s claims to the contrary, there never appears to have been any realistic possibility that refinancing or additional financing of the Baha Mar project could be available from any source other than CEXIM – or a lender to a new owner of the project.”

However, Dr Rollins rejected this saying the government had paid its attorneys to speak in favour of its decision to collude with the Chinese, adding that he viewed this as an attempt to mislead the public by the prime minister.

“The two pieces of correspondence referred to by the prime minister in relation to the Baha Mar Chapter 11 process, I would like for the record to reflect that those opinions were received from the government’s lawyers in the United States and the United Kingdom,” Dr Rollins said.

“It stands to reason that those opinions were paid for by the government of The Bahamas and the correspondence were dated June the 20th as indicated by the prime minister and not at the time that this matter was actually in full bloom.

“So we had no way of knowing whether or not this was a rushed and panicked effort by the government to seek to provide itself some relief from all the criticism and Mr Speaker in relation to what he read it said specifically from the correspondence that from ‘those instructing us’ meaning they were receiving instructions from the government.

“We have no way of knowing, seeing that these are legal opinions provided by legal council of the government of the Commonwealth of The Bahamas. We have no way of knowing that we can rely on the objectivity of these opinions.”

Mr Christie said both the US and UK based attorneys have been retained by successive governments. He said all he requested of them was to sum up the matter in order to make public what their advice to the government was on these issues.

Comments

Well_mudda_take_sic 3 years, 4 months ago

Rollins is absolutely right when he claims the Chinese (CSCEC, CCA and CEXIMB) have a loaded gun to the head of Christie now that the next general election is less than a year away. In fact the Chinese have no doubt all along been engaged in delaying tactics knowing that each day that goes by increases Christie's desperation; even more so now against the back drop of the outcome of the recent referendum which, for all intents and purposes, was a resounding vote of no confidence by the Bahamian people in the corrupt Christie-led PLP government. Obviously Christie and his cohorts have shopped around for legal opinions to support their disastrously erroneous decision to tortiously interfere in Baha Mar's contractual arrangements with CSCEC/CCA and CEXIMB for the purpose of wrongfully weakening the hand of Zarkis Izmirlian in his very legitimate disputes with the Chinese. These self-serving legal opinions have no doubt cost Bahamian taxpayers a small fortune, as has all of the many very expensive trips made by Bahamian officials and their entourages to China to grovel before the Chinese and negotiate back-room deals for the "favoured" corrupt political elite in our society. Effectively, Christie was instrumental in nationalizing the Baha Mar development (and robbing the Izmirlian family of their $800 million equity stake in the project) for the benefit of the Chinese and the "favoured" corrupt political elite within his government. Christie says nothing about the very significant additional concessions that the Chinese are in the process of extorting from the Bahamian people with his help as a lamed and failed leader of our country. Yes, Rollins is spot on when he claims our PM is about to give the house away (with all the Bahamian people in it) in an effort to get re-elected as PM or at least try lessen the impact of the Baha Mar failure on his legacy.

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Reality_Check 3 years, 4 months ago

It is noteworthy that "the very significant additional concessions" Christie is now willing to grant CSCEC, CCA and CEXIM ("The Chinese") were not offered by Christie to Zarkis Izmirlian at the commencement of the Chapter 11 proceedings. Instead Christie unwisely decided to derail the Chapter 11 proceedings and back the wrong horse: The Chinese. Thanks to Christie, not only have the Chinese received the benefit of the Izmirlian family's $800 million invested in the project, but they now stand to gain very significant additional concessions that were never offered to Zarkis Izmirlian. One can only wonder what "enormous rewards" the Chinese are throwing the way of Christie and his closest corrupt elitist political friends as an expression of their great gratitude!

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realfreethinker 3 years, 4 months ago

How much did we pay for that " legal" opinion ?

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B_I_D___ 3 years, 4 months ago

That would be the Chinese...or...oh yeah, the Chinese...the government is in so deep with the Chinese they have no choice. Any rational thinker would have seen the misappropriation and mismanagement of the Chinese and side with Sarkis to carry it on...but not these fools...they are so deep in it with kick backs and pay offs and loans to the Chinese...China man got Perry by the short and curly's...they definitely don't have him by the balls 'cause he ain't got any balls!!

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TalRussell 3 years, 4 months ago

Comrades the re-posting of misinformation as truth and assume it is accurate, how Izmirlian had his $800 million family's Baha Mar investment robbed for the benefit of the Chinese, doesn't makes no sense, that is unless you have not yet revealed information to share which supports such ridiculous claims of political mischief?
Comrade Bloggers if only you would take the time out to walk the length that damn Izmirlian 'dock," you might just clear your heads of such utter rubbish?
This is not to say the PLP cabinet have not contributed to prolonging the 'bankrupted' resorts closure. The PM had no damn business sticking his nose in izmirlian's poor judgments business. It should have always remained a matter left to be dealt with between the Chinese and Izmirlian.
The Bahamaland state funds of One Billion dollars was and remains a major blunder committed by both former law partnering prime ministers, and in the good name of the state.

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B_I_D___ 3 years, 4 months ago

So are you trying to state that PGC has balls or not?

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John 3 years, 4 months ago

If Perry Christie bid you good morning these days, take your rain coat, umbrella and snow boots when you go out. And if you staying home, keep the hurricane shutters handy.

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Well_mudda_take_sic 3 years, 4 months ago

Simply unbelievable that Christie has the audacity to say that one of the two firms short listed "has ties to Bahamian investors". In other words, he has either already picked out or is in the process of picking out which of his "favoured" cronies will receive a gratis chunk of the Baha Mar spoils in exchange for his royal screwing of the Izmirlian family and the rest of us as Bahamian taxpayers, largely for the benefit of "the Chinese". Christie is a bold faced corrupt demon to the core who, as Rollins points out, is now inherently conflicted in his ability to represent the interests of the Bahamian people on any matter involving Baha Mar and the Chinese. The Chinese have been put on notice, and rightfully so, that Christie (with a loaded gun to his head) has no legitimate authority to negotiate (on a non-transparent basis) any contractual agreement for significant additional concessions to be granted that would remain binding on the Bahamian people in the impending post-Christie era.

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RUKiddingMe 3 years, 4 months ago

PGC and the PLP are so gutless, shiftless and worthless that Water & Sewerage should be charging them for disposal fees every time one of them opens their filthy lying mouths!

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TalRussell 3 years, 4 months ago

Comrade Reality-Check, bless ya little 'British' heart. How many years now here as a resident from England and still not shaken your loyalty to colonialism?
Don't you forget that today is the day you get to go to vote at the British High Commissioner's office, if to exit or stay in the EU? You will need take along your British passport for ID, okay?
In the meantime, keeps your nose out local people's business and things, okay?

http://tribune242.com/users/photos/20...">http://thetribune.media.clients.ellin..." alt="None">

by TalRussell

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Reality_Check 3 years, 4 months ago

I'm sixth generation Bahamian on my mother's side and fifth on my father's side.....bet that makes me a whole lot more Bahamian than you!

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TalRussell 3 years, 4 months ago

Comrade Reality-Check unfortunately, means not much cause lots fifth and sixth generations on the fathers and mothers side that sailed over from England, the ticket agents and pursers didn't ask the passengers for no special identification and lots Englishman's and Englishwoman's were accepted as "legal" landers. Only thing is, generations offspring's later, none them ain't never did apply become regularized as Bahamalander's. Guess what, back then the English were considered the Haitians of the day.
Might not be bad idea to check on your papers?

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SP 3 years, 4 months ago

..... KARMA Paging Perry Gladstone Christie, KARMA Paging Perry Gladstone Christie ......

The countdown to Mr Christie's inevitable fall is definitely on. There is NOTHING Christie can do at this point to save his skin.

What a legacy!

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Hogfish 3 years, 4 months ago

'ties to Bahamian investors'

HA! don't makes me laugh. We know those ties is wicked witch AMG and the jewelries businesses. and his other friend the landscaping, and of course he own son!

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Reality_Check 3 years, 4 months ago

Not to mention Baltron "Bagman" Bethel and others like him!

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ThisIsOurs 3 years, 4 months ago

I don't know why the PM read this letter as evidence of anything, it's clearly biased.

"CCA Bahamas Ltd and CSCEC – negotiations in which the government sometimes participated." that's putting it mildly. Did they read Sir Baltron's self-leaked email? Did they hear Jerome Fitzgerald, Bradley Roberts and the PM speaking about Izmirilian in the HOUSE.?????

Dr Rollins by himself has proven to be a more effective opposition than the entire opposition. It's very strange to witness

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