Baha Mar resort placed in receivership
Sarkis Izmirlian, the Greek billionaire who saw his dream of the largest casino resort in the Caribbean 90 percent complete before a dispute with his Chinese state-owned contractor led to a halt in construction and the start of liquidation procedures by the government of the Bahamas, has made a new proposal to save the largest construction project the islands have ever seen.
Izmirlian has offered to put up more of his own money to save the $3.5 billion project from liquidation. His family already put up nearly $1 billion—$850 million from Izmirlian himself—for completion of the six-hotel gaming and leisure complex on Nassau’s legendary Cable Beach, with the remainder put up by the state-owned Export-Import Bank of China (Exim). Exim recently denied to loan Izmirlian’s company any more money to complete the project.
As Baha Mar Ltd. laid of all of its 2,000 active and non-active employees two weeks ago, negotiations between Baha Mar, Exim and the contractor, China State Construction Engineering Company subsidiary China Construction America, continued, mediated by court-appointed joint provisional liquidators and officials of the Bahamian government, in an effort to stave off liquidation procedures, which had been set to officially begin November 2 before the Bahamas Supreme Court extended the deadline for private resolution to November 25.
Last week, Izmirlian offered to put up more of his own money through short-term investments, in exchange for collateral and a senior ranking among other creditors to protect his investment, according to a Bloomberg report that cited unnamed sources close to the negotiations.
Meanwhile, the Supreme Court has placed Baha Mar into receivership at the request of Exim, a move the head of the Bahamas’ Progressive Liberal Party called “positive” in that it will ensure the parties cooperate to complete and open the resort.
“The (receivership) decision will mean a new era of cooperation to get the project finished and people back on the job,” PLP Chairman Bradley Roberts said in a statement. “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.”
Roberts added that the Bahamian government has displayed “considerable patience, confident and strong leadership skills in mediating the negotiations between the parties. “The government is commended for its overall handling of this crisis and has the full support of the PLP,” he said.
The Baha Mar project stalled after construction delays caused projected grand openings slated for last winter and spring to be cancelled. With the project—comprising six hotels, the largest casino in the Caribbean, a golf course and a full range of amenities along Cable Beach—nearly complete, Izmirlian, frustrated by the delays, stopped paying the contractor, blaming CCA for low-quality work and for missing deadlines.
CCA halted construction and accused Baha Mar Ltd. of simply trying to avoid paying its bills. In June, Baha Mar filed for U.S. Chapter 11 bankruptcy protection, which the Bahamian government refused to recognize, initiating the liquidation proceedings in an attempt to seize control of the project, complete construction and open the resort under a new manager.
Opening the resort—with its estimated 5,000 jobs and an annual payroll of more than $130 million, or 12 percent of the country’s GDP—is a priority for the Bahamian government, which is counting on the new tourism to counter chronic unemployment.
Last week, a prominent Bahamian lawmaker called upon Izmirlian to quickly reach a resolution to the Baha Mar troubles. “The country is going to be affected by the result of Baha Mar’s position,” MP V. Alfred Gray told the Bahamas Tribune, “and as leader of the country it is my view that (Izmirlian), having been invited, must stay involved until some resolution is had.”
The receivership, meanwhile, takes the decision-making out of the hands of Izmirlian, although the court-appointed liquidators are likely to work with him to come to a deal as soon as possible to get the resort up and running.
