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Two Bidders Reach Baha Mar Shortlist

By NEIL HARTNELL

Tribune Business Editor

and NATARIO McKENZIE

Tribune Business Reporter

Baha Mar’s receivers have shortlisted two groups, one with a Bahamian investor connection, as potential ‘preferred bidders’ for the $3.5 billion development, the Prime Minister said yesterday.

Perry Christie, in closing the 2016-2017 Budget debate, said the China Export-Bank, Baha Mar’s $2.5 billion secured creditor, had yet to select either of those recommended by Deloitte & Touche as the ‘preferred bidder’ for the property.

Referring to the ‘investment incentives’ that the Chinese are said to have demanded from the Government, Mr Christie said: “The Opposition has raised the question regarding concessions which the Government is being asked to consider in relation to the completion of the Baha Mar project.

“This is a matter which will require negotiations, primarily with the new investor in this project, who is yet to be decided upon by the China Export-Import Bank.

“The current position, as I understand it, is that two firms have been shortlisted. One of them has a Bahamian investor connection.”

Mr Christie did not identify the two groups or the ‘Bahamian investor connection’, adding that he had asked the China Export-Import Bank and its receivers to “separate” Baha Mar’s construction completion from the task of finding a purchaser.

He said the Deloitte & Touche receivers were currently in Beijing, meeting with the China Export-Import Bank (EXIM) and China State Construction Engineering Company (CSCEC) to hammer out an agreement for construction remobilisation.

“The EXIM Bank, the receiver-managers and the construction company are currently in Beijing; as we speak they are currently in Beijing,” Mr Christie told the House of Assembly.

“The Government of the Bahamas is not a party to those talks. We can observe, but we are not a party to those talks. Those talks are now taking place, Mr [Raymond] Winder leading a team as the receiver-manager in Beijing, with the construction company and the leadership of the bank, and they are discussing and negotiating a construction contract in order to remobilise and complete the project as soon as possible.”

Mr Christie announced last month that the Government and two Chinese entities had entered into a “framework agreement” to complete the stalled Baha Mar resort “as expeditiously as possible”.

Mr Christie yesterday again defended his administration’s role in the Baha Mar saga, saying he did whatever he could to facilitate the involvement of Baha Mar’s original developer, Sarkis Izmirlian.

He yesterday sought to destroy what he called “the myth” that his administration had exercised poor judgement in opposing the original developer’s Chapter 11 bankruptcy filing in a Delaware court.

To do this, he released two separate memorandums, dated June 20, 2016, from the Government’s US and UK attorneys, which said it would have been “a perverse outcome” for a Delaware court to determine the fate of a $3.5 billion Bahamas-based investment project.

Charles Russell Speechlys, the UK legal advisers, justifying the Government’s decision to oppose Mr Izmirlian’s Chapter 11 bankruptcy protection filing, said it was “a fundamental tenet” of cross-border insolvency law that winding-ups and receiverships be administered by courts in the same country as the subject company or assets.

“Had [Chapter 11] recognition been granted, the Bahamian court would have been such a ‘foreign court’ - a perverse outcome,” Charles Russell Speechlys said, as the Delaware Federal Bankruptcy Court would then have become the primary forum determining Baha Mar’s fate.

“One of the reasons the Government of the Bahamas resisted the recognition of the Chapter 11 was because were it to do so, it would have been tantamount to Government of the Bahamas accepting that the Delaware court had primacy over the Bahamian court in this matter, and the Bahamian court’s role and jurisdiction in this matter would have been limited to assisting the Delaware court in its supervision of the Chapter 11 process. The Government of the Bahamas was strongly advised that it should not allow this to happen.”

Charles Russell Speechly added that the Government could not be bound by the Chapter 11 process itself without consenting to this. Yet all the unsecured Bahamian creditors would have been bound.

“It would arguably have been untenable for the Government of the Bahamas to advocate the recognition of a process that allowed a debtor to ‘cram down’ the interests of Bahamian creditors, whilst Government of the Bahamas would have to be made whole in the process,’” the UK law firm argued.

Hogan Lovells, the Government’s US attorneys, said the Chapter 11 filings had given Mr Izmirlian “short-term tactical benefits - at a steep price”.

The consequences of letting the Chapter 11 process proceed, it argued, would have been Baha Mar deciding what contracts to retain or discard, leaving all unsecured creditors without any security.

Hogan Lovells added that Mr Izmirlian subjected Baha Mar’s assets “to the exorbitant fees payable as administrative expenses” to attorneys and advisers in the Chapter 11 process.

These fees became priority payments over unsecured creditors, and totalled more than $6.3 million.

“Had the Chapter 11 cases continued, the attorneys’ fees would have increased dramatically, and the Baha Mar debtors also would have been expected to pay investment bankers’ fees of $150,000 per month, plus additional fees based on milestones, subject to a cap of $14 million,” Hogan Lovells added.

Comments

Well_mudda_take_sic 1 year, 5 months ago

Re-post: 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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Well_mudda_take_sic 1 year, 5 months ago

Re-post: 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 1 year, 5 months ago

Re-post: 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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