Legislation

Bahamas – Developer remains silent as Baha Mar is placed into receivership

By Phil - 6 November 2015

The Supreme Court in the Bahamas has placed the $3.5bn Baha Mar project into receivership after approving an application from the EXIM Bank.

The aim now is to ensure that the relevant parties co-operate to get the resort completed and open. However the court has already appointed liquidators to make 2,020 Baha Mar employees redundant due to the financial insolvency of the project.

Attorney General Allyson Maynard Gibson said: “We will only take steps that are in the best interest of the Bahamian people. We want Baha Mar remobilised, opened and operational.”

However with Baha Mar developer Sarkis Izmirlian, who has spent $850m to $900m in the project, sidestepped in the move, which also takes away any decision making power from him, some observers are seeing it as a hostile takeover.

Free National Movement Chairman Michael Pintard said: “It is safe to assume that there is going to be further litigation and if we were to judge this matter by any other receiverships we have observed in this region, this could lead to a protracted struggle, causing further delays in opening the resort. If Baha Mar’s developer is not factored into discussions going forth it is reasonable to expect that the investor is going to engage in what will turn out to be a protracted fight to protect the $900m he has already invested.”

“The other thing that raises concern for us are charges that have been laid against this government, charges of nationalisation,” he added. “Some say it is a hostile takeover. The FNM is not agreeing or disagreeing with that characterization, but clearly that is a negative signal to the international community in terms of how the Bahamian government has chosen to operate. The FNM is deeply concerned that such a message has the potential to have a negative impact on people wishing to do business in the Bahamas. We must be careful not to send the wrong message, especially given softness and sluggishness of the economy that we have had since the recent recession. We note that amidst all of this, the PLP chairman is trying to rewrite history by giving the impression that the prime minister and his ministers intervened in this situation in the appropriate matter. We have always maintained that both the developer and the Chinese share responsibility for the Baha Mar impasse. Furthermore, when the government got involved it should’ve done so as an honest broker. Instead, Mr Christie and his foreign minister entered by making inflammatory remarks and choosing sides rather than staying above the fray and offering guidance and support to the process.”

The criticism followed comments from PLP Chairman Bradley Roberts who said: “The decision will mean a new era of co-operation to get the project finished and people back on the job. There is much work to be done but we believe that this is a necessary step to give the project overall direction and control. Our main aim, objective and wish are to ensure that the job prospects of the 2,000 displaced Baha Mar workers are improved so that they can return to work in the shortest possible time.”

He added: “The government of The Bahamas under the leadership of Perry Christie has demonstrated considerable patience, confident and strong leadership skills during these negotiations, at all times protecting the sovereignty of the Bahamas, the investment of Bahamian suppliers and demonstrating to the global community that the government has given the developer every available opportunity to retain control of the project. The government is commended for its overall handling of this crisis and has the full support of the PLP. The PLP encourages the government to continue to aggressively pursue the requisite bridge financing necessary to cause for the re-engagement of the displaced Bahamian employees at the resort.”

The decision to liquidate and make so many people redundant has also been publically criticised by Prime Minister Perry Christie.

A statement from the Office of the Prime Minister said: “The government has made the strongest possible representation to the joint provisional liquidators and the stakeholders in this commercial transaction between the developer Baha Mar, the secured lender China Export Import Bank and the principal contractor and an equity partner, China State Engineering and Construction Company, for the retention of Bahamian staff, meeting outstanding obligations to Bahamian contractors and sub-contractors, funding (both interim and for completion purposes) and completing the project on mutually acceptable terms as soon as possible.”

“The government is presently engaged in meetings and other dialogue with the relevant stakeholders and the joint provisional liquidators to arrive at the best possible solution which will best serve the national interest.”

Deloitte and Touche said: “The PLP notes the joint provisional liquidators’ statement that they will work closely with the receiver, the Bahamas’ government, the financier and the general contractor in facilitating a speedy resolution to this matter in the national interest. This atmosphere of cooperation can only strengthen the interests of commercial parties in remaining a part of the project, thus ensuring its success.”

Liquidators, Alastair Beveridge and Edmund Rahming, added: “Our role now is to work closely with Deloitte as the bank’s appointed receivers with a view to exploring and deciding on the most appropriate strategic option in order to see the resort completed and open for business.”

The threat of lengthy litigation from its investors though is inevitable. Amongst a war of words over what promised to be a spectacular casino resort, the silence from Baha Mar’s spokespersons, who said they were not authorised to speak about the receivership, perhaps sent the loudest message.