Hopes are rising in the Bahamas for a happy end to the Baha Mar saga on news that Chow Tai Fook Enterprises is in talks to take ownership of the stalled super-resort.
Local media reported last week that the privately owned Hong Kong conglomerate, whose holdings include the largest jewelry retailer in the world, has applied to the government of the Caribbean island nation for approval to acquire the US$2 billion, 2,000-room project, which has languished unfinished for almost two years.
Reports are that Chow Tai Fook is already in discussions with hotel brands previously involved with Baha Mar, including Hyatt and SLS Hotels, and that it may bring in its own subsidiary, Rosewood Hotel Group, as a partner.
“CTFE is looking forward to having Baha Mar join its portfolio of world-class integrated resort development projects,” said Chairman Henry Cheng. “We are fully committed to this project and plan to hire as many Bahamians as possible to work at the property.”
Chow Tai Fook is aggressively diversifying into the global casino space. In Australia the company has partnered with Star Entertainment on development of a $3 billion integrated resort with gaming in the Queensland capital of Brisbane. The company is also eyeing possible IRs in South Korea and Vietnam among other locations.
Baha Mar was taken out of receivership in the Bahamas last year by its principal financier, Export-Import Bank of China, which has committed to completing construction and getting the resort open. To this end, CEXIM recently transferred the resort to a subsidiary called Perfect Luck Holdings for the purpose of negotiating a sale.
But nothing associated with Baha Mar has ever gone smoothly.
For one, the transfer to Perfect Luck is being challenged by Baha Mar’s jilted founder, Sarkis Izmirlian, who lost the resort after a falling out with CEXIM and China State Construction, Baha Mar’s lead contractor, over costs and other problems. When CEXIM and other lenders pulled their support, Izmirlian tried to place Baha Mar into a financial reorganization under U.S. bankruptcy law. But Prime Minister Perry Christie opposed the move and instead the resort went into receivership under the jurisdiction of the local courts, forcing Izmirlian out. He has since approached CEXIM with an offer to buy the resort back at a price he claims is superior to any existing bids. Nothing has come of that to date, however, and Izmirlian says that’s because the government and CEXIM have conspired to ignore his bid, an allegation Christie denies.
And there’s another potential obstacle. It comes from a former Baha Mar director and reputed Izmirlian ally named Dionisio D’Aguilar. He claims Chow Tai Fook is in league with Macau casino tycoon Stanley Ho and therefore is “unsuitable” to hold a gaming license.
This is based in part on reports from various international law enforcement agencies over the years that have tied Ho to organized crime groups in Asia.
The ailing, 94-year-old Ho, who held a monopoly on casinos in Macau for four decades and founded one of the Chinese territory’s six current casino concessions, has never been charged with any crime, but D’Aguilar claims that Chow Tai Fook was unable to obtain casino licensing in the U.S. states of Nevada and New Jersey as a result of its connection to Ho.
“Who in the U.S. market is going to want to go into a venture with these guys?” he said. “It’s another flawed attempt by the Christie government to solve this problem.”
Chow Tai Fook has responded by asserting that it “never applied for a casino license in the U.S.” and cites its approval in Australia for a casino license for the Brisbane IR as proof of its integrity.
The company explained that its ownership is only an indirect investor in Ho’s Macau concession and has no association with the management and operations of its casinos.
“The Cheng Family is an investor in Sociedade de Turismo e Diversões de Macau, which owns the (Ho) gaming subsidiary SJM Holdings,” the company told the Bahamas’ Tribune Business newspaper. “The Cheng family’s role in the Macau casino is strictly as an investor, with no involvement in day-to-day management or oversight of the gaming industry in Macau.”
It added, “As a company, we are committed to integrity and good governance in all of our business operations worldwide. There will be no affiliation on this project with STDM or SJM.”
