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Cca Return ‘Beyond Stupid’ If Local Creditors Ignored

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Bahamian Contractors Association (BCA) president yesterday warned it would be “beyond stupid” to permit China Construction America (CCA) to finish Baha Mar without local creditors first being ‘made whole’.

Stephen Wrinkle told Tribune Business that it was “inconceivable to me, and any right-thinking Bahamian” that the Christie administration would push for such an arrangement without first securing the interests of local contractors and vendors.

And he questioned why CCA would be sought out to finish the $3.5 billion development when its failure to complete the job on time, and on budget, triggered Baha Mar’s Chapter 11 filing and ultimate demise last summer.

Mr Wrinkle also expressed concern that in its haste to resolve the Baha Mar impasse, and have something positive to say in tomorrow’s 2016-2017 Budget communication, the Government was effectively supplanting the project’s Deloitte & Touche receivership team.

“I don’t know why they would be aggressively pushing for that to begin with. Why they are trying to get CCA to finish this is beyond me,” the outspoken contractor said of the Government’s seeming desire for CCA to complete Baha Mar’s construction.

“I don’t know why their position would be to promote CCA finishing the project when they didn’t do it the first time.”

Mr Wrinkle was speaking out following revelations, first made in Tribune Business last week, that the Government is pushing for CCA to reach an agreement with Baha Mar’s secured creditor, China Export-Import Bank, to complete the $3.5 billion development.

This is directly tied to Prime Minister Perry Christie’s desire to have some positive Baha Mar developments to announce in tomorrow’s Budget communication, and to get the economy moving with a general election just one year away at most.

Mr Wrinkle, though, was among those pointing to the numerous questions any such agreement for Baha Mar’s construction completion would raise - especially at this point.

He queried whether the 123 Bahamian contractors, owed a collective $74 million for work performed at Baha Mar, would be “bumped down” the creditors’ queue again if CCA resumed work.

Many local contractors and specialists were hired as sub-contractors of CCA, meaning that the Chinese company has the obligation to fully compensate them for work done.

Whether CCA will seek payment of its outstanding pre-Chapter 11 costs, including sums owed to its Bahamian sub-contractors, is among the key issues yet to be addressed should it reach agreement with its fellow Chinese bank to complete the construction.

Mr Wrinkle, though, emphasised that no Bahamian contractor or sub-contractor would return to the Baha Mar site without being fully paid for work done.

“They need to be paid; simple as that,” the ex-BCA president said of the Bahamian contractors. “The Government is the only entity that can mandate that as part of the negotiations.

“To let the Bahamian contractors and suppliers hang out to dry while the Chinese come back and finish the project is inconceivable to me, and any right thinking Bahamian must think the Government has to include resolution of the outstanding debts before they commence work.

“Some people do stupid things, but that would be beyond stupid. I can’t imagine them not including this in the negotiations.”

While other media made much of the Government’s push for CCA to complete Baha Mar’s construction, such a move hardly represents new thinking.

In extending Baha Mar’s provisional liquidation status in February, the Government’s director of legal affairs referred in an affidavit to discussions between CCA and its fellow Chinese state-owned entity over the resumption of construction.

Prime Minister Perry Christie mentioned the same talks between the contractor and the China Export-Import Bank in his mid-year Budget address that same month, and the Government appears to again be pinning its hopes on such an arrangement - and being able to announce it in the House of Assembly tomorrow.

Mr Wrinkle, though, questioned whether such a deal would cut across the work being performed by Baha Mar’s receivers and the Supreme Court-approved process to sell the $3.5 billion development.

That process has reached a critical point, as the Deloitte & Touche accountants sift through what are thought to be nine serious offers submitted to acquire Baha Mar before the May 9 deadline.

“If they were so concerned about a level playing field, everyone should have waited on the receivers and the sales process,” Mr Wrinkle told Tribune Business.

“They’re [the Government] trying to make something happen, and something needs to happen, but whether flying to Beijing before the receivers complete their exercise is in the best interests of the Bahamian people at this time is an unknown - certainly to us and the Bahamian contractors.”

That refers to the ongoing visit to Beijing by Allyson Maynard-Gibson, the attorney general, and Sir Baltron Bethel, the prime minister’s senior policy adviser (and investments ‘guru’).

While there has been no public confirmation or explanation for their trip, it is almost certainly connected to Baha Mar and the Government’s desire for some progress in resolving the project’s impasse given its importance to the Bahamian economy.

“It’s an extremely complex web they’ve woven,” Mr Wrinkle told Tribune Business, suggesting that all parties - the Chinese, the Government and original developer, Sarkis Izmirlian - bore some responsibility for Baha Mar’s failure.

Still, Mr Wrinkle conceded that Mr Izmirlian’s offer to make all creditors whole and complete the project was unlikely to be matched by any other Baha Mar bidders. And he agreed that the original developer was best-placed to complete, and open, the project in the shortest possible time.

Equally, though, Mr Wrinkle said CCA’s ‘inside knowledge’ gave it an advantage both when it came to construction and over rival bidders (if it has made an offer itself), because it will be able to complete the project more cheaply.

“The other thing someone has got to question is how it ballooned up to $600 million,” he added of Baha Mar’s estimated completion costs. “That’s a hell of a lot of money without significant explanation of what’s involved in the doubling of the price.”

Comments

Sickened 5 years, 11 months ago

We all know EXACTLY why CCA will get this contract; they are willing to give the head PLP's the most in return for their support. And, as election is coming soon, the PLP want to get as much money now as they possibly can in case they lose.

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timchuck 5 years, 11 months ago

I agree that all subs should be paid in full if at all possible. But I question why they would continue working with such large amounts receivable for so long.

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