The efforts of Sarkis Izmirlian, founder and developer of the .5 billion Baha Mar resort project, has run into a legal roadblock in his efforts to regain ownership of the stalled project.
Officials of Deloitte & Touche, Bahamas, the court-appointed receiver and provisional liquidator of the project, told Bahamas Tribune Business last week that they cannot consider Izmirlian’s offer to repurchase the finish the project, guaranteeing payment of all debts, which the developer made in an April 11 letter to China’s Export-Import Bank (Exim), the state-owned financier of the project, because the receivers are banned from negotiating deals outside of the Supreme Court-approved sales process, which began last month.
Raymond Winder, Deloitte & Touche (Bahamas) managing partner, who with two Hong Kong-based Deloitte & Touche partners is acting as Baha Mar’s receivers, said the Supreme Court process effectively bars them from entertaining any bids submitted outside the court.
Izmirlian’s April 11 letter reaffirmed the purchase offer he made in January, which was rejected at the beginning of the receivership process, which is charged with finding a new owner for the unfinished mega-resort.
“It is our position that any entity, and that includes Sarkis, the original developer, desirous of purchasing the resort, their offers have to come through the sales process we have agreed with the courts,” Winder told Tribune Business. “These bids will be assessed, and the best bid selected at the appropriate time. The matter is before the courts, and the courts have agreed a process to identify the potential bids, and select one of those bids as the ultimate purchaser for the property. That’s the process we’re going to follow.”
Winder called Izmirlian’s direct offer to Exim an “end run” around the court-approved process. “Even if we wanted to negotiate one-on-one with Sarkis, we couldn’t do it,” he said, “and the bank can’t negotiate with him one on one. We can’t go making a deal with Sarkis.
“While Sarkis does have an interest in the project, there are other unsecured creditors that have rights in it, too,” he explained. It’s in the interests of those creditors, and Sarkis, that we select the best bid.”
One of those bids will be from Izmirlian, and his history, knowledge and investment of nearly $1 billion in the project may make him well-placed to succeed, but his bid will be equally considered with all others, the receiver said.
Izmirlian has promised to complete the project and to make Exim and all Bahamian creditors whole. That includes the Chinese state-owned contractor, China Construction America, which halted construction after a reported 97 percent of the project was complete because Izmirlian refused to pay them, citing missed deadlines and inferior work.
Izmirlian’s company, BMD Holdings, Ltd., responded to the comments in Tribune Business with a letter addressed to Deloitte & Touche branches in the Bahamas and Hong Kong that are serving as the court-appointed receivers.
“We read your comments in the press today about our offer with great interest,” the letter said, “although we cannot help but wonder why you or CEXIM did not at least also communicate with us directly.
“Please be assured that we are not laboring under any impression that we will be given an advantage over any other investor who bids to buy the project, and rather feel that we may be disadvantaged over any other investor given that your response to our previous offers—made well before any official sale process was launched—was merely that they were unacceptable, with no explanation or further engagement. Was the court (or the joint provisional liquidators) informed that there was a standing offer, from us or any other party, at the time that the receivers sought consent for the sale from the court?”
The letter went on to complain that Izmirlian’s company was never given any information on the court procedure for bidding. “Notwithstanding various public statements made in recent weeks referencing a court approved sales process, the receivers (or for that matter the joint provisional liquidators who you say approved the sale process) have not revealed what the Supreme Court order provides and have not outlined the process,” the letter said. “You say in the articles that all offers must come through the receivers at the appropriate time, and that you will assess those bids and provide the best offer. We have previously inquired about the procedure to make a bid and associated timelines, only to be told that information is not currently available…
“Would you not think that potential bidders for this multibillion-dollar asset are entitled to understand the sales process?”
Meanwhile, the Bahamas’ main opposition party, the Free National Movement (FNM), is lambasting the government for its handling of the Baha Mar mess. MP Loretta Butler-Turner called Prime Minister Perry Christie “disastrously negligent” and “delusional” for putting the project in receivership and liquidation proceedings.
“The Bahamas cannot afford to allow the largest single hotel development in its history to sit idle and unopened for much longer,” Butler-Turner said in a press statement, noting that Christie’s government “dramatically failed to monitor the construction of Baha Mar.
Various observers warned that liquidation would be a grave mistake,” she said. “But a delusional and incompetent prime minister would not listen. At the time, various government ministers made unnecessary and ill-advised remarks, which frightened potential foreign investors in respect of immigration policy and about the government’s approach to the protection of private property.
“It is highly likely that the Baha Mar impasse would have been resolved had the government not acted so unwisely and precipitously. The decision to place Baha Mar in liquidation has had dire economic and foreign policy consequences.”
