The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government must tell any Baha Mar purchaser to “go to hell” unless they commit to making all Bahamian creditors whole, a former director of the project said yesterday.

Dionisio D’Aguilar told Tribune Business that the Christie administration had “better make damn sure” that any preferred bidder took care of the substantial debts owed to Bahamians, especially with a general election coming up.

With the $3.5 billion project’s original developer, Sarkis Izmirlian, having publicly offered to make all creditors - including the China Export-Import Bank - whole, Mr D’Aguilar said any winning bidder to emerge from the Baha Mar sales process needed to at least match his bid.

Despite having largely given up all control over Baha Mar’s fate to the bank, as the project’s secured creditor, the Government still has some leverage given that it will have to approve any new owner and the structure of the deal.

Many observers believe that, as a condition of such approvals, it will insist that any new buyer or the Chinese must pay all Bahamian creditors 100 per cent of what they are owed.

This, though, could be a ‘deal breaker’ given the substantial sums involved. For starters, some 123 Bahamian contractors are owed a collective $74 million for work done at Baha Mar.

Then there are the trade vendors, suppliers and others. A total $123 million was said to be owed to trade creditors when Baha Mar filed for Chapter 11 bankruptcy protection last June, and Standard & Poor’s (S&P) recently put the project’s debts as high as $170 million.

With Western-based buyers seeking deals, and looking for the China Export-Import Bank to itself take a ‘haircut’ on its $2.6 billion debt, the last commitment they will want to make is repaying all Bahamian creditors.

Yet with a general election in the offing, the Christie administration simply cannot afford to approve a deal that fails to ‘put Bahamians first’.

“If Sarkis Izmirlian is saying he will deal with them, the Bahamian creditors, and this next person comes along and pays off the China Export-Import Bank, but doesn’t deal with the Bahamians, then the Government has to look out for the interests of the Bahamian people,” Mr D’Aguilar told Tribune Business.

“If they approve such a deal, then they’re looking out for the interests of the Chinese. We are looking for the Bahamian Government to look out for the interests of Bahamians. If that deal is not better than the one Sarkis offered, then the Bahamian Government has to tell that buyer: Go to hell.”

Mr D’Aguilar said that with both the Chinese and Baha Mar bidders looking out for their own interests respectively, the hundreds of Bahamian creditors - and their employees - needed someone to look out for them.

“The Bahamas Government had better make damn sure that whatever goes down, the new purchaser, if not Sarkis, does exactly the same thing,” he told Tribune Business.

“If not, the Bahamian people will be holding the bag. I’m looking to see if the purchaser is taking care of Bahamian creditors. If the intended purchaser offers way less than that, then Perry Christie should tell them; Go to hell.

“The Government should never approve that. If someone offers more, and you are a Government taking care of Bahamians first, make sure the creditors get straight,” Mr D’Aguilar continued.

“The Chinese are looking out for the Chinese. Someone had better look out for the Bahamians. That’s the Government’s responsibility.”

Tribune Business sources familiar with recent developments suggested yesterday that the 16 groups conducting due diligence on Baha Mar had translated into nine serious offers by the May 9 deadline set by the property’s Deloitte & Touche receivers.

They are now sifting through the bids, and the mountains of associated documents and paperwork, to determine whether a second round is required, or if they can make recommendations now to the China Export-Import Bank.

Raymond Winder, Deloitte & Touche (Bahamas) managing partner, who is one of the three receivers, declined to comment when contacted by Tribune Business.

However, Tribune Business understands that Prime Minister Perry Christie is getting increasingly eager to have something positive to announce in next week’s 2016-2017 Budget communication, and which shows concrete progress, on Baha Mar.

This newspaper understands that the receivers, and the Chinese, have been left in no doubt as to his feelings and position on the matter, although whether it will do any good - particularly given the China Export-Import Bank’s approach to-date - is another matter.

Tribune Business sources suggested that Mr Christie and the Government are pinning their hopes on being able to announce that an agreement has been reached for China Construction America (CCA), the project’s contractor, to resume construction at Baha Mar.

He announced that CCA and the China Export-Import Bank were working on such an arrangement during February’s mid-year Budget communication, but nothing has been heard on this since, especially with the bank giving every sign it does not want to invest a dollar more.

The last estimate of the remaining construction cost was $600 million, and there is an expectation that CCA may bid to acquire Baha Mar itself, given its knowledge of what remains to be done and ability to bill itself ‘at cost’ to keep prices low.

Mr D’Aguilar said it was unlikely that any bidder other than a Chinese group would offer the $3 billion-plus necessary to make the bank and Bahamian creditors whole, and complete construction.

“You can’t finish this project without Bahamian vendors,” he told Tribune Business. “It will be very hard for CCA to operate in this environment if they pick up the project and ignore the creditors.

“We now have to see what comes out of the sales process and compare it to the offer Sarkis made, and see whether it’s a fair one or not and the Bahamian creditors get dealt with.”