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Cca Fearing Baha Mar Completion Miss

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar's main contractor is raising the alarm that it will again miss the $4.2 billion project's completion deadline, following the eruption of a legal dispute with a key supplier.

China Construction America's (CCA) Bahamian subsidiary, in legal filings obtained by Tribune Business, warns that itself - and Baha Mar - will "suffer incalculable and irreparable damage" if a Florida-based supplier continues to withhold 50 per cent of the project's lounge chairs.

CCA, in a lawsuit filed with the south Florida federal court last Thursday, alleges that these chairs are "essential to the timely completion" of the Cable Beach development.

It warns that it will be unable to meet the October 15, 2017, 'substantial completion' deadline for finishing Baha Mar's construction unless Source Outdoor is compelled to deliver the 1,420 chairs it is holding.

Failure to hit that date, CCA alleges, will expose it to penalty fees of $150,000 per day - rising to $250,000 per day after one month - under the terms of its construction contract with the China Export-Import Bank.

However, the reason why Source Outdoor is allegedly withholding the shipment suggests that 'shorting' Baha Mar's foreign creditors may have produced unintended consequences that are now coming back to bite.

In what some observers may see as a case of 'what goes around, comes around', CCA claims its Florida supplier is using the chairs as 'leverage' to force payment of pre-Chapter 11 debts owed to it by Baha Mar.

CCA is alleging that it has no responsibility for these debts, and that these have no connection to the $390,500 chairs shipment, which it has already fully paid for. Yet the Chinese contractor's lawsuit makes no mention of its role in the Baha Mar creditor payout process.

Instead, CCA is alleging that Source Outdoor is now selling Baha Mar's lounge chairs "on the open market" in a bid to recover debts owed by original developer, Sarkis Izmirlian, prior to the ill-fated bankruptcy protection filing in the US courts.

"This conduct would allow Source to sell the same chairs twice and, more to the point, would foreclose permanently the ability of CCA to obtain the items for which they have already paid in full, and which are essential to the timely completion of the project," Baha Mar's main contractor blasted in its legal filings.

"Even if CCA were to immediately endeavour to purchase replacement chairs, the time required for the negotiation of a new purchase order, for the manufacture of the replacement items and for their shipment to the Bahamas would result in non-compliance by CCA with the 'substantial completion' date, and would subject it to the extraordinarily large liquidated damages provided for in CCA's agreement with Perfect Luck Assets, the owner of the project.

"Aside from the unmanageable financial burden that would be visited upon CCA were it unable to obtain immediate receipt of the chairs, because of the extremely high level of publicity and governmental attention being paid to this particular project, CCA's reputation would suffer widespread, incalculable and irreparable damage."

Raising the stakes, CCA then filed for an emergency injunction and quick hearing of its case, urging the south Florida district court to order that the 1,420 chairs be "delivered immediately" to its Miami-based freight forwarder for onward shipping to Miami.

"The project for which these chairs are intended is the most significant tourist development in recent years in the Bahamas," the Chinese state-owned contractor said in its Friday legal filings.

"Its completion has been carefully calibrated to coincide with the start of the 'high season' for tourism in the islands. Because of the significance of this project, and the overriding importance of the completion date, CCA is contractually obligated to complete its activities by October 15, 2017.

"Failure to deliver the project, including this element of the project, by this substantial completion deadline will expose CCA to extraordinary liquidated damages. The liquidated damages begin at $150,000 per day for up to 31 days after the 'substantial completion' date. Thereafter, the liquidated damage amount increases to $250,000 per day.

CCA added that it faced "overwhelming additional harm" beyond these fines should the October 15 completion be missed, especially reputational damage with both the Bahamian government and wider construction/tourism industries.

"For a variety of reasons, this project has been the subject of an extraordinarily high level of publicity and intense governmental attention," the contractor added.

"CCA assumed responsibility for the procurement and delivery of furniture, fixtures and equipment after the commencement of the project, the completion of which has been determined to be a national priority by the Government of the Bahamas.

"Any failure to meet this contractual deadline would result in immediate, irreparable and incalculable damage to CCA's reputation in the construction industry worldwide and within the Government of the Bahamas," CCA continued.

"It would result in unprecedented derogatory publicity at the peak of the tourism season, and the resulting harm to CCA's good name would be irreparable and virtually impossible to overcome."

This was further backed by a June 28, 2017, affidavit from Natalia Dwornik, CCA's Bahamas-based contract manager, who warned that the consequences of missing the October 15 completion date would be "catastrophic" for all concerned. All legal papers from Nassau were notarised by attorney Obie Pindling.

The contents of CCA's lawsuit are likely to set-off alarm bells within the Minnis administration, and both the China Export-Import Bank and Baha Mar's prospective new owner, Chow Tai Fook Enterprises (CTFE).

Given that Baha Mar's 300-room SLS Lux resort is due to open in October 2017, it is likely that any construction delays would force this - and, possibly, the Rosewood's April 2018 opening - to be postponed.

This, in turn, could delay employment for hundreds of Bahamians, and hold up economic activity crucial to expanding Bahamian GDP at a time when Baha Mar remains virtually the only investment project capable of delivering this.

If the 'worst case scenario' outlined by CCA comes to fruition, it will also potentially complicate the closing of Baha Mar's purchase by CTFE.

The latter's deal with the China Export-Import Bank and its Perfect Luck vehicle only closes when the $4.2 billion project's construction is completed, and this deadline was extended in the 'Heads of Terms' with the former Christie administration until December 1, 2017.

Any suggestion that CCA is likely to miss another construction completion deadline, in addition to the three that were missed under Mr Izmirlian, is also especially badly timed given that Baha Mar's former developer just last week called for the Government to place a "moratorium" on completing Baha Mar's sale to CTFE.

Mr Izmirlian now has further evidence he can use to support these demands and his previous allegations against CCA, where he blamed "shoddy workmanship" - and its failure to complete Baha Mar on time, and on budget - as the main reasons for the project's fall into Chapter 11 bankruptcy protection.

CCA, meanwhile, accused Source Outdoor of "commercial extortion" through its withholding of the final 1,420 lounge chairs.

"Source is apparently trying to collect money owed to it by the original owner of the project, Baha Mar Ltd, which became insolvent," CCA alleged. "Baha Mar Ltd's secured creditor liquidated its assets and then sold the project to owner [Perfect Luck].

"In order to coerce CCA to pay the debts of Baha Mar Ltd, which if anything are owed by a third party and demonstrably unrelated to the contract, Source is calculatedly and unjustifiably interfering with CCA's relationship with [Perfect Luck] by withholding delivery of the chairs, thus making it impossible for CCA to achieve key construction deadlines and in this manner undermining CCA's own contractual commitments.

"Not only is this malicious and insupportable conduct interfering with the existing contract between CCA and [Perfect Luck], it is obviously interfering with CCA's long-term advantageous business relationship with [Perfect Luck......

"Among other forms of damages, CCA is being exposed to the dramatically severe liquidated damage provision of its agreement with [Perfect Luck], and is at risk of the loss of its valuable and lucrative relationship with [Perfect Luck], the marketing and development opportunities related to the successful grand opening of the Baha Mar resort, and subsequent construction delays stemming from Source's breach."

CCA alleged that Source Outdoor has ignored its May 3, 2017, demand letter for the delivery of the lounge chairs and to stop selling them to third parties.

"The deadline for Source's response has since passed, and Source has refused to deliver any of the 1,420 chairs for which it has been paid in full," the contractor alleged. "Contacted by counsel for CCA, Source's lawyer advised that Source would be taking no affirmative action to provide the chairs and that CCA should 'do what it has to do'."

CCA's lawsuit is less than forthcoming on its relationship to the "secured creditor" and the "owner", who are the China Export-Import Bank and Perfect Luck. The latter is a vehicle of the bank, and all three entities are ultimately owned and directed by the Beijing government.

Nor is there any mention of CCA's role in the $101.5 million creditor payout process, which discriminated against foreigners and in favour of Bahamians, despite one of the contractor's executives sitting on the five-person committee determining who received something, and how much.

The document, though, makes numerous references to CCA's "advantageous business relationship" with the China Export-Import Bank and Perfect Luck, and how it "has profited - and is profiting - both financially and commercially" from this tie-up.

CCA's warnings and pleas also recall the confidential January 20, 2015, memo to its Beijing parent in which it warned that the critical March 27, 2015 opening date was likely to be missed despite assurances to the contrary that were given to then-prime minister, Perry Christie, and Mr Izmirlian just two weeks earlier.

The contractor warned then that the Baha Mar project and its stakeholders faced "irreversible and catastrophic loss" unless drastic action was taken.

"Currently, the project is at a crucial dash to meet the final deadline," CCA warned CSCEC, its Beijing parent, in January 2015.

"However, because the professional sub-contractors failed to provide a sufficient workforce in time, several deadlines for sub-projects were missed and the target completion for several sections got delayed.

"This will directly impact the target of opening on March 27. The situation is now very difficult which, if it cannot be turned around, will soon cause irreversible and catastrophic loss."

CCA warned that it would incur a $250,000 daily fine for each day beyond March 27 that the project remained incomplete.

Its memo, addressed to 'Mr Yi', a CSCEC director, also added that "unmeasureable damages to the brand and reputation of CSCEC will also be caused" should Baha Mar's target opening date be missed.

Comments

banker 1 year, 4 months ago

Yes, chairs are holding up the opening. Nothing more, just chairs. Can't open the hotel because dey won't ship the chairs. You can't open without a thousand chairs. Heavens. That will make 4 missed openings. But it won't be the end. They will miss the fifth opening due to the fact that they can't get paper clips. Dammit, who knew it would this hard to open a hotel complex. The fooking chairs !!

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realfreethinker 1 year, 4 months ago

"It would result in unprecedented derogatory publicity at the peak of the tourism season, and the resulting harm to CCA's good name would be irreparable and virtually impossible to overcome." What a fooking joke. This is all par for the course. Now y'all feel how Izzy felt. No sympathy here. The penalty is all bullshit anyhow because the bank and the construction company is owned by the same people " Red China" Karma is a bitch. What goes around comes around

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DDK 1 year, 4 months ago

Here we go. Another load of horse manure!

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proudloudandfnm 1 year, 4 months ago

What a stupid excuse.

If the sale to Chow took Fook is not completed yet please deny them the sale and let Sarkis finish his resort and open fully in a year. This 25% occupancy nonsense the amateur PLP agrees too does nothing for our country. Get rid of these crooked, inept chinese!!

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B_I_D___ 1 year, 4 months ago

I say that if CCA miss another deadline that that becomes a 'force majure' of the contract, much like they are holding that clause for BEC/BPL...

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observer2 1 year, 4 months ago

The old Bahamian saying "When tief, tief from tief, God laugh".

Yet the new FNM AG and PM find nothing wrong with these crooks.

They better either bring those chairs from China or pay their US creditors.

By the FNM Government seeing nothing wrong with discriminatory and preferential payments based on nationality I feel the US thinks differently. US creditors could freezes in the US for relief of this sovereign fraudulent scheme.

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sealice 1 year, 4 months ago

CCA's reputation would suffer widespread, incalculable and irreparable damage."

Your reputation already sux bad globally........

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BahamasForBahamians 1 year, 4 months ago

They are the second largest construction company globally, what the fook are you talking about?

Only here in The Bahamas we make enemies with world leaders.

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Greentea 1 year, 4 months ago

That's because they represent the Chinese government and they strong arm weaker nations into letting them build all the time. I have been all over Africa and the CCA is present EVERYWHERE from east to west, north to south. But too many of their projects disintegrate within years from unnecessary stadiums in Zambia and single track trains in Tanzania to roads in Ethiopia. The roads and bridges built by the Italians in Ethiopia during occupation seventy years ago still strong as an ox. Those built by CCA after five years, falling down the side of mountains. Presence and initial look doesn't translate to quality or longevity. Bahamar will be no different.

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sealice 1 year, 4 months ago

When Perry and the PLP were screwing this up I wonder if they realized how much they were screwing it up? how long it would take to "unscrew" if that's at all possible? and how many generations of Bahamians will continue to suffer because of their actions? This is their legacy a hotel that when it finally opened up crumbled back to the ground because of the PLP and their cronies.....

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alfalfa 1 year, 4 months ago

Same old SH-T. How could you foolishly think that a company who is owed money on chairs ordered by the previous owners, would ship them to the new owners, who say they have no legal responsibility to, and have not paid them, and many other creditors. No Bahamian company would deliver them. So pay up; re-order from another supplier, or stay closed. This is only one of many such instances to come.

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Well_mudda_take_sic 1 year, 4 months ago

The Red China government and all of its controlled enterprises involved with the Baha Mar project, i.e. CCA, CSCEC, CEXIMB, Perfect Luck, the Fooking Company, etc. should all be told to pack their bags and get the hell out of the Bahamas. The Red China government does not give a damn about the damage it has done and continues to do to the Bahamas as a tourist destination ..... it simply wants control of country for other reasons harmful to all Bahamians and U.S. interests in our region. The Minnis-led FNM government should forthwith renounce our country's continued support of the One China policy and immediately invite the ROC (Taiwan) to re-establish diplomatic relations with the Bahamas. We have nothing to gain and everything to lose by continuing to behave like we are not masters of our own destiny. Our new FNM government is not obliged to continue honoring commitments made and concessions granted by a corrupt predecessor government (led by Christie) to corrupt agents/enterprises controlled by corrupt officials of another country (Red China). It's the Bahamian people's time, and Minnis had better stomp on and remove all of the corrupt players associated with the Baha Mar project once and for all.

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Greentea 1 year, 4 months ago

Every time I pass Bahamar I see our fisheries going the tubes. That is one of many things these suck necks really want.

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ConchyJ 1 year, 4 months ago

Well, well, well isn't it ironic that the EXIM Bank of China did not approve to pay any US vendors or former US employees any of the monies owed to them and now they think US companies or US citizens will assist or patronize that crooked establishment. Shame on those people that blindly allowed the Chinese government to take the property from Sarkis! Oh and CCA has the balls to petition a US Court in FL for their chairs...your whole country is a joke and we can't wait to protest at the court house for all the world to see how crooked you are!! You reap what you sow bitches!!

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OldFort2012 1 year, 4 months ago

You are naturally free to waste your time in any way you see fit, but your first sentence pinpointed who your beef is with: " EXIM Bank of China did not approve to pay any US vendors or former US employees any of the monies owed to them." Google the Chinese Embassy address in Washington DC and protest there. We might be a "joke", but we still know how to follow a cogent argument.

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jackbnimble 1 year, 4 months ago

Until this hotel is returned to its rightful owner, it will forever be cursed! I'll be shocked if it ever opens.

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MonkeeDoo 1 year, 4 months ago

Its a great new way of doing business. Go to Nassau Motor Company and buy a new car on the following conditions of provisions. It rains every Wednesday afternoon from now to Christmas. The Bahamian Dollar is devalued in October. Anything else you feel might give you a back door to withdraw for the sale if you wish to. Maybe I got it wrong ? The sale has conditions right ? Guaranteed by another party ?

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Economist 1 year, 4 months ago

The Chinese are bad news for The Bahamas.

First they kill the economy in Freeport and now they are well on their way to killing it in Nassau.

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TalRussell 1 year, 4 months ago

Comrades! Trump no stranger to the Bahamaland and the of the ways our politicians do business.
Long before the The Donald became the US President and before Trump climbed in the money lending bed of the Chinese government's controlled banks - The Donald purchased a majority stake in Resorts international from Merv Griffin, which owned Paradise Island Hotel and Casino.
I really don't think we want The Donald's business ways to become involved with Baha Mar?

http://tribune242.com/users/photos/20...">http://thetribune.media.clients.ellin..." alt="None">

by TalRussell

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banker 1 year, 4 months ago

Sigh ... let me correct you again. Donald did not purchase a majority stake in Resorts International from Merv Griffin. James Crosby, of the Mary Carter Paint Company of New Jersey owned Resorts International. The paint business was failing so they diversified and acquired 1,200 acres of land near Freeport, Bahamas in 1962, followed by a 75 percent interest in Paradise Island in 1966. The company built a bridge to the island and developed it with hotels and restaurants, and opened the Paradise Island Casino there in 1967. In 1968, Mary Carter sold its paint division and changed its name to Resorts International. In 1986 Crosby died. Trump beat out several other bidders for just a controlling stake for $79 million. Trump drove the company to near bankruptcy, and he offered $22 dollars a share for the remaining stock in the company to try and salvage it.

Merv Griffin came along and offered $35 a share. Trump and Griffin actually sued each other, and eventually came to an amicable agreement where Griffin got Resorts International including the Bahamas and Trump bought the Atlantic City Taj Mahal for $270 from Resorts International. Trump went on to raise $500 million to finish the casino and bankrupted it and sold it to Carl Icahn who was forced to close it.

Griffin continued to own Resorts International when he started defaulting on the junk bonds that he issued to finance it. He put up PI for sale with no takers. In 1994 Griffin underwent bankruptcy again and Sol Kerzner bought the Paradise Island property.

At the time Trump owned controlling interest in Resorts International, the PI property was never valued at anything more than $25 million. Trump's focus was Atlantic City, and that is why Merv ended up with Paradise Island. Both Merv and Trump were financed by shyster Mike Milliken's junk bonds from Drexel Burnham Lambert which disastrously flamed out for both Trump and Griffin causing bankruptcy. Milliken went to jail.

Donald thought that PI was not worth his while. He did not buy anything from Merv Griffin.

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TalRussell 1 year, 4 months ago

Comrade Banker, you couldn't be more mixed up on denying The Donald's purchase of a majority stake in the Paradise Hotel and Casino which he acquired from Merv Griffin. A cousin mine, a well known QC handled the sale for Merv Griffin.

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banker 1 year, 4 months ago

Please read the following link and stand corrected:

https://en.wikipedia.org/wiki/Resorts...">https://en.wikipedia.org/wiki/Resorts...

Real estate developer Donald Trump, who owned two Atlantic City casinos, beat out several other bidders to purchase a controlling stake in the company from Crosby's family for $79 million in July 1987.[26]

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John 1 year, 4 months ago

IZMIRILIAN has all the ammunition he needs to take CCA and China EXIM bank to take the Chinese to court and prevail and easily prove that it was the construction company's incompetence and/or collusion that caused his demise with Bah Mar. But maybe he has been made timid by the previous government's laST REACTION TO HIS ATTEMPT TO SEEK JUSTICE.

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ohdrap4 1 year, 4 months ago

I have six adirondack lawn chairs for sale at 1,000 each. call me.

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banker 1 year, 4 months ago

Don't. They will blame the non-opening on you, because your adirondack chairs are the wrong colour.

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TheMadHatter 1 year, 4 months ago

Their suit is baseless because the Chinese Govt owns CCA & Exim bank so the late "penalties" they may pay will only go to themselves.

If i owned two companies and one sued the other and won and i started "paying" $150g per day to myself i would be arrested for money laundering before sunset.

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watcher 1 year, 4 months ago

I looked into my crystal ball and can foresee a future headline

"CCA Fearing Baha Mar Opening"

That's the day when the world will see just what a shithole we have been saddled with after our Chinese overlords have completed their "construction" and the first negative blogs and customer reviews start to surface

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John 1 year, 4 months ago

The fact is the Chinese don't really want to open and operate no hotel. They got their claws on the property like they wanted so so hurry to go nowhere soon. Watch what is happening with the Chinese owned hotel properties in Freeport and even with the Pointe in Nassau. It's the property they want stupid. They will only complete and open if forced to. Maybe the PM will have to inteervene, eventually. Do a financial evaluation of Sarkis Izmirilian and see if he is capable of getting the properties finished and opened. Then talk to the Chinese in no uncertain terms: Get the hotels finished and opened or we will take possession of the property (legally) and find a buyer. Remember while the property is in the hands of china EXIM bank there is no 'real creditor, so no pressure to generate revenue to pay a mortgage. And since then 'done gat" Izmirilain's $900 million, they can afford to stall.

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ashley14 1 year, 4 months ago

Your probably right. Maybe the Chinese want to take over the Bahamas. I know you don't want that. Those communist bastards tell their citizens where they live, what job they are allowed to do, how many kids they can have and they take 80% of their pay check. Of course there is more but too many things to list. Don't do business with these people.

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ashley14 1 year, 4 months ago

Also I thought it was open. They are advertising on television in the States that they are open. The commercial is very inviting. It makes you want to go. It showed a aquarium like at Atlantis. Do they have one or are they adding footage from Atlantis?

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TalRussell 1 year, 4 months ago

Comrade Banker, your argument grows weaker with each attempt at confusing the sale between Donald Trump and Merv Griffin, post. Just because Trump never took a physical ownership possession of Paradise island Hotel & Casino - it had absolutely nothing to do with the fact of Merv's simultaneously selling the Taj Mahal casino and Resorts' fleet of helicopters and other real estate back to Trump for and undisclosed sale amount. I would set the music to the Trump and Merv deal to the baby and the carriage nursery rhyme.

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banker 1 year, 4 months ago

Oh for fook's sakes. I don't have an argument. I have the facts. You have hearsay from a bloviating putative cousin. Trump owned majority interest in RI. It was on the verge of going bankrupt, like the minds and public purse of PLP. He needed money to complete Atlantic City Taj Mahal. He offered $22 per share for ALL of the outstanding shares that he did not own. He owned majority at this point, which he bought from James Crosby.

The minority shareholders were incensed at the Trump low-ball offer. Along comes Merv. He offers $35 for all shares. This ruins Trump's plan. The minority shareholders vote to accept Merv's offer. At this point, Trump still owned majority shares. Trump, seeing a way out, split the company and he kept Taj Mahal. Merv took over the rest of the company. At no point did Merv own majority when Trump was present. As a matter of fact, the sale of the Taj Mahal helped Merv acquire the majority of shares of RI. This is not opinion or argument. This is fact. I am not like the PLP and make up shiite like you do. I just report the facts and stick to the truth. Y'all can't handle the truth.

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