By NATARIO McKENZIE
Tribune Business Reporter
The Government is demanding that Baha Mar’s casino and convention centre, and associated hotels, by operated by “world class” brands who have injected equity financing into the project, the Prime Minister said yesterday.
Mr Christie’s address to the House of Assembly on the $3.5 billion project contained little that was new, other than the Government’s position that Baha Mar’s operators must have ‘skin in the game’ by investing financially in the development.
“We, the Government, have made it clear that the casino, convention centre and their respective hotels must be operated by world class specialists, who must either have equity in the project or make significant capital contributions to the project,” said Mr Christie.
It is likely to be dangerous to read too much into this statement, but some may interpret it as an acknowledgement that the China Export-Import Bank - rather than a buyer - may have to open Baha Mar in collaboration with casino and resort brand partners.
The Government is keen for the casino, convention centre, associated hotels and the golf course to open by the peak winter 2016-2017 season, a timeline that would put a potential completion in March/April - just in time for the general election, which is likely to be called the following month.
Many observers, though, believe that meeting such a deadline will be immensely difficult if not impossible, even if the China Export-Import Bank finds a purchaser. Tribune Business was previously told no buyer was interested in concluding a deal for an incomplete project.
Andrew Farkas, who partnered with Sir Sol Kerzner on a bid to acquire Baha Mar prior to the current ‘buyer search’ process, previously estimated that the project could open in winter 2017-2018 provided remobilisation occurred in early summer. This is now taking place in September, meaning that Baha Mar’s completion may even be hard-pressed to meet late 2017.
Mr Christie, meanwhile, also confirmed that China Construction America (CCA), Baha Mar’s main contractor, had been given a package of investment incentives in line with the Hotels Encouragement Act.
This means that CCA will enjoy Customs duty and ‘border VAT’ waivers on all construction materials, plus fixtures and furnishings, at the very least.
The Prime Minister, though, reiterated that CCA received no “unusual concessions”, and that the Government was constrained by its agreement with Atlantis in terms of what it could grant to the Chinese.
“The suggestions that the Government has provided unusual concessions to conclude this deal are not true,” Mr Christie said. “Most countries provide concessions to attract and encourage investment. Trade agreements contemplate concessions. Our laws provide for concessions to all investors.
“My advisors have instructed me to be cautious about what I say given the Court order [sealing the agreement to complete Baha Mar]. I can say that CCA was given Hotel Encouragement Act concessions for construction. They were given that by the FNM government and will be given the same concessions to complete the construction by my government.”
Mr Christie reiterated that the Government was constrained by Atlantis’s ‘Most Favoured Investor’ status in terms of what it can offer any rival hotel and casino developer.
“This is an agreement that is in existence, that my government is aware of,” he said. “The concessions that would be offered to a new developer cannot exceed those given to Atlantis.”
Mr Christie added that the China Export-Import Bank’s application to the Supreme Court to ‘seal’ all documents related to the construction completion agreement, and keep their contents confidential, was “not unprecedented”.
“Much has been made of the fact that the arrangements are currently under seal in the Supreme Court of the Bahamas,” he said. “The application to have the document sealed was made by China Export-Import Bank.
“This kind of seal is standard, especially in transactions of this complexity, scale and international market sensitivity. Remember that the bank already has billions of dollars invested in this project. This is not an easy-to-deal with project, not an easy-to-deal with matter.”
Mr Christie continued added: “Putting the documents under seal enables the bank to finalise these sensitive negotiations with the normal business confidence that one would expect.
“Despite the wishes of some, it is simply unrealistic to expect global businesses to conduct their negotiations in the media. This is not unprecedented. The court approved the sealing of the documents to have the parities secure the best outcome for the property, and the court will lift the seal if and when it deems it right to do so.”
Mr Christie added that the Baha Mar saga had “strengthened” his government’s relationship with Beijing.
“Our relationship with China has strengthened because of our mutual interest. While they look for global opportunities in which to invest, we in the Bahamas look for international investors to support our national development,” he said.
“During many years of public service we have had to deal with developers who have run into problems. I have had the privilege and the benefit of being able to learn from the successes, and from some of the mistakes, of past administrations.
“We know from experience that it is not government by sound bite that counts, but a willingness to put in the hours, to do the hard work, to bring people together and above all to produce the best outcome for Bahamians. This outcome is good for the Bahamas and great for Bahamians.”