Investor seeking $2.7bn in South Ocean dispute

A controversial Austrian investor is pledging to seek an extraordinary $2.7bn in damages if his attempted acquisition of New Providence’s 384-acre South Ocean resort is ultimately thwarted.

The claim is the latest astonishing demand by Dr Mirko Kovats, a Lyford Cay homeowner who has permanent resident status in The Bahamas, in his battles to acquire separate Bahamian resort properties. He has already launched Judicial Review litigation against the Government after it blocked his efforts to acquire Abaco’s Treasure Cay property, claiming a total $3.127bn in damages there.

His South Ocean move, if pursued, would take the combined damages sought by Dr Kovats to some $5.8bn. There is no suggestion he would be awarded anything remotely close to these sums should he prevail in his legal battles, but the latest development provides further evidence of the Austrian investor’s hard-nosed approach to business and litigation.

Dr Kovats’ position was revealed in December 21, 2022, legal filings in the south Florida federal court. He is attempting to obtain legal discovery from Southern Cross, the real estate and property development firm owned by world-renowned golfer, Greg Norman, which acted as an agent for South Ocean’s Canadian pension fund owner in their talks over his proposed acquisition.

The Austrian investor’s position is that he had a legally binding sales agreement with the Canadian Commercial Workers Industry Pension Plan (CCWIPP) to acquire the still-shuttered southwestern New Providence resort in 2014, but the latter then committed a breach of contract by refusing to honour and conclude the agreement. CCWIPP and its Propco affiliate then sought to sell South Ocean to Albany’s investors, but that deal has now been held up by Dr Kovats litigation.

“Dr Kovats is an international real estate investor, permanently residing in the Bahamas since 1995,” his legal filings asserted. “The South Ocean property is located on New Providence, and consists of 384 acres of land and 3,000 feet of beach access. It is adjacent to an ultra-luxury development known as Albany, and Dr Kovats’ redevelopment plan includes sales of lots, condominiums, a resort hotel, a marina, and a casino.

“Dr Kovats reached an agreement with the pension fund to buy the South Ocean property, using a corporate vehicle called the Bahamas Island Consortium to do so. The pension fund reneged on this deal, so Dr Kovats filed suit for breach of contract and has already overcome an initial motion to dismiss in The Bahamas.

“Dr Kovats seeks to enforce his agreement with the pension fund or, in the alternative, in excess of $2.7bn in damages (which is informed, in part, by a CBRE market analysis prepared for the sale of the South Ocean property).... The case is now proceeding to the case management stage, where the parties exchange evidentiary presentations in advance of trial.”

That CBRE document, which has been seen by Tribune Business, is at least a decade old because it refers to projected land sales at Albany in 2013. Its value, therefore, for determining damages seems dubious. “Unfortunately, the South Ocean property litigation is now bleeding into Dr Kovats’ other property disputes in The Bahamas,” the latest legal filings allege.

“For example, Dr Kovats has agreed to purchase a property from a private seller known as Treasure Cay, but the Government of The Bahamas refuses to provide a perfunctory ‘letter of no objection’ necessary to purchase this property.

“The Government has raised explicitly with Dr Kovats his attempts to purchase the South Ocean property even though it is not involved in that purchases. All of this has led Dr Kovats to believe that his different attempts to purchase and develop property in The Bahamas have been subject to undue influence by the Government.”

The concern here for The Bahamas is that prime tracts of real estate, extremely valuable for driving future resort development, investment and job creation, face being potentially tied-up for years in expensive, time-consuming court fights. Several sources have suggested that litigation is frequently employed as a hardball negotiating tactic by Dr Kovats as a means to an end in securing his desired outcome.

The Canadian pension fund, which took over South Ocean after Ron Kelly defaulted on his loan repayments, has been seeking to exit its last remaining Bahamas resort investment for almost two decades. Viewing the 2014 deal with Dr Kovats as having fallen through, CCWIPP subsequently agreed to sell the property to the adjacent Albany developers, who include Lyford Cay-based billionaire Joe Lewis, golfers Ernie Els and Tiger Woods, and singer Justin Timberlake.

The Austrian’s legal action, though, has halted Albany’s purchase and forced the high-end southwestern New Providence residential community to put redevelopment plans for its South Ocean neighbour on ice. This newspaper, though, was told that Albany and its principals have not walked away from the deal, and are instead watching and waiting to see how the legal battle between Dr Kovats and the pension fund plays out.

“Albany has agreed to sit back and wait and hang in there,” one source, speaking on condition of anonymity, told Tribune Business previously. “They’re confident [CCWIPP] will win this action and get rid of them.”

Dr Kovats has also attracted controversy in Austria throughout his business and investing career, despite building his publicly-listed industrial group, A-Tec Industries, into a conglomerate that once featured over 70 companies and more than 10,000 employees, with turnover pegged at more than one billion euros.

Numerous companies he was involved with early in his business career became insolvent, and Dr Kovats has faced numerous civil lawsuits during his business career, being criminally indicted twice. He was sentenced to six months’ probation in 2000 by the Vienna High Court over the bankruptcy of a nightclub he had invested in. Dr Kovats was also charged over another nightclub insolvency in 2007, although he was never convicted.

Tribune Business’s own research also found that Dr Kovats and a fellow executive were fined by Austrian regulators in 2012 for providing misleading information to the capital markets, thus harming investors. Following a two-year period of turbulence that began in 2011, A-Tec moved to restart business activities in 2013, after undergoing a reorganisation.


Baha10 1 year, 5 months ago

… break out the 🍿… with Sarkis, SBF and now Kovats engaged in “major” Litigation, 2023 could be quite a year!


Maximilianotto 1 year, 5 months ago

Fatal for any FDI in The Bahamas.


DWW 1 year, 5 months ago

Interesting challenge that might change common law throughout if successful


DWW 1 year, 5 months ago

But is a suit in the USA really relevant in the Bahamas jurisdiction? Curious minds want to know.


Baha10 1 year, 5 months ago

… appears to be some sort of discovery process based on US nexus.

… as for damages claimed, this appears to be derived from “their” own figures upon which Kovats based his purchase, which if so, will only continue to go up, not down, as such figures become more and more outdated.

All very interesting and will come down to whether or not Kovats was truly screwed over … as if he was, Lord help whoever was involved!


Observer 1 year, 5 months ago

Seems to be a slippery dealer, Hold him.


Maximilianotto 1 year, 5 months ago

Government seems to be on very thin ice with continuing interference. After BahaMar and FTX disasters this could be the final straw to kill FDI. Not good considering $11 bn foreign debt and another $10 bn Bahamas investors disputes in litigation. 2023 challenging refinancing requirements will reflect these issues unless settled before it’s too late and before more s..t will hit the fan. Izmirlian announced names and SBF will throw his Bahamian friends under the bus.Discoveries sought in the US is an interesting option and might disclose more than some actors expected. Looking like July 10 anniversary of independence will uncover much tradition better kept under the yellow rug.


Maximilianotto 1 year, 5 months ago

I forgot „Our Lucaya“ fairytale. But who’s counting any more if it’s $6 billion or $60 billion won’t happen anyway as all pipe dreams for creating upbeat sentiments.


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