The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sarkis Izmirlian last night declined to enter the formal Baha Mar sales process, and accused the $3.5 billion project’s receivers of playing ‘rope a dope’ with him.

Baha Mar’s original developer, in a letter issued to the Deloitte & Touche receivership team just as the deadline to submit bids to acquire the project expired, said it “makes no sense” for him to enter the process.

Mr Izmirlian again blasted the sales process as “opaque” and “surreptitious”, arguing that it could undermine the “legal rights” enjoyed by himself and his bid vehicle, BMD Holdings.

Raising concerns that his offer might not receive due consideration, the Lyford Cay resident said he was unsure how bids submitted via the sales process would be evaluated, and whether a buyer would even be selected.

Mr Izmirlian and BMD Holdings said they were sticking by their existing offer, first made in January, direct to China Export-Import Bank, Baha Mar’s secured creditor.

Reiterating that this offered to make both the bank and Baha Mar’s unsecured Bahamian creditors ‘whole’, Mr Izmirlian accused the receivers, Deloitte & Touche (Bahamas) managing partner, Raymond Winder, and his two Hong Kong-based counterparts, of refusing to even entertain his offer.

The China Export-Import Bank has adopted the same approach, though, and Mr Izmirlian last night sought to inject some urgency into the bank’s thinking by implying that his offer would not remain on the table forever.

“BMD Holdings has determined that it makes no sense for it or its affiliates to enter the second party Deloitte sales process, because there is no clarity how any bids made under that process would be evaluated,” Mr Izmirlian told the receivers.

“Furthermore, there is no certainty that, even if there are actual bids in that process, a buyer will be chosen which is in the best interests of the Bahamas and the future of Baha Mar.”

Mr Izmirlian then sought to claim the ‘moral high ground’ by arguing that his offer was “completely transparent” to Bahamians, given that it had been made direct to the Chinese bank.

“This is in sharp contrast to the tight-lipped, opaque process engineered by Deloitte at the behest of China Export-Import Bank,” he wrote.

“We have contacted the receivers on several occasions affirming that we are ready, willing and able to sit down with [them] and China Export-Import Bank to work out the details of our offer so that Baha Mar can move forward.

“Instead, the receivers engage us in the proverbial ‘rope a dope’, including saying [they are] willing to sit down, but not to discuss our offer, only their process- a surreptitious process which Deloitte knows well could impair our legal rights and cause our offer to be denied proper consideration.”

The reference to ‘legal rights’ likely alludes to Mr Izmirlian’s concerns, first reported in Tribune Business, over the Non-Disclosure Agreement (NDA) the receivers wanted him to resign before he could participate in the sales process.

Although the Deloitte team offered to modify this for him, Mr Izmirlian felt the requirement he not consult those formerly involved with Baha Mar, and who are no longer in his employ, could expose him to potential litigation because it would be difficult for him to prove he was abiding by these terms.

And he also feared such a development could “sully” and “contaminate” his existing legal actions against Baha Mar’s Chinese contractor, including the $192 million claim against its Beijing parent in the UK High Court.

Still, Mr Izmirlian’s decision not to bid is likely to disappoint numerous parties, including the Government, given Prime Minister Perry Christie’s recent meeting with Mr Izmirlian and hopes that the China Export-Import Bank would give his offer due consideration.

There was consensus among the opposition parties, and many in the private sector, that Mr Izmirlian and his former executives represented the best hope for getting Baha Mar open and completed in the shortest possible time, given their intimate knowledge of the construction, plus all commercial and contractual relationships with hotel brands, retail and restaurant tenants and suppliers.

Many former Baha Mar employees retained a loyalty to Mr Izmirlian, and will have been looking to him to kickstart the development and provide them with jobs again.

The receivers and China Export-Import Bank may also have been relying upon an Izmirlian bid, given their previous hints that his earlier offer represented the ‘benchmark’ against which all rival bids are judged.

Mr Izmirlian, though, made it clear yesterday that he will not play that game, saying: “We are not willing to risk being used as a stalking horse.

“Indeed, the receivers have already been quoted in the media asserting that any party which can equal our offer will be in a favourable position. That may be their agenda but it is not ours.”

However, the China Export-Import Bank has yet to respond to Mr Izmirlian’s offer, even though it has been ‘on the table’ for four months.

“China Export-Import Bank is able to work directly with us to make our attractive solution for Baha Mar an immediate reality, and it is of great misfortune to the project and its people that the bank so far has chosen not to even respond to us about our proposal made four months ago,” Mr Izmirlian said.

Seeking to give the Chinese a nudge, he added that BMD Holdings would “for now keep open its offer” to the bank.

Mr Izmirlian wrote: “We have made our proposal to China Export-Import Bank. We are prepared to proceed with it if the bank is.

“We do not need to wait until the end of the year for our offer to be fulfilled. With that said, we want to make very clear to all parties that our willingness to proceed with our offer also has its limits. We will not be, as we have said on other occasions, ‘one hand clapping’. Time is of the essence for both our offer and for Baha Mar.”

All this again suggests the Chinese do not want to deal with their former partner, and there have been suggestions reaching Tribune Business that Mr Izmirlian’s criticisms of the sales process are a ‘smokescreen’ to conceal the fact he lacks the financing to make a bid.

It was suggested after last week’s Supreme Court hearing on Baha Mar’s joint provisional liquidation that 16 potential bidders had shown interest prior yesterday’s bid deadline. And the receivers expressed optimism that a new buyer could be selected by the fall.

Some have suggested that China Construction America (CCA), Baha Mar’s controversial contractor, would be an obvious bidder - both because of its construction knowledge, and ability to ‘bill itself at cost’ and control the $600 million spend some have estimated is necessary to complete the development.

CCA is employing the same development model at The Pointe in downtown Nassau. Tribune Business has also been told that the Government will likely require any Baha Mar buyer to make Bahamian creditors, including the 123 contractors owed a collective $74 million, ‘whole’ in return for approving the deal.

Extolling the virtues of his offer, Mr Izmirlian said: “We have been quite clear to China Export-Import Bank, the Bahamian government and the people of the Bahamas of our willingness and commitment to undertake a transaction that can be economically attractive to all parties and which can jumpstart Baha Mar to successful completion.

“Baha Mar is our vision, and every initiative and action we have undertaken has had the singular purpose of making Baha Mar a reality for the Bahamas.

“We understand that along the way, different parties have disagreed with how we have proceeded at points, but no party can question our desire to make Baha Mar a success and our priority for the well-being of the Bahamas,”he continued.

“We do not know if the same can be said for the process the receivers are undertaking or, for that matter, for the parties who may participate in it

“We have no interest in colonising Baha Mar revenues for use in other foreign domains. We live here and are part of the Bahamian community.”