Sealing the deal on 30 March, 2010: from left, Export-Import Bank of China vice president Li Jun, Sarkis Izmirlian, and China State Construction vice president Liu Jinzhang (Source: China Construction America)

Companies

Tribulation timeline: The history of the Baha Mar resort

7 October 2015 | By Rod Sweet | 0 Comments

Billed as the biggest leisure scheme in Caribbean history, the $3.5bn Baha Mar casino and resort in the Bahamas has stalled at the finish line amid bitter public recriminations and a legal battle spanning three countries.

Financed by a Chinese bank, the audacious scheme was to have boosted not only the fragile economy of this tiny island nation but also the reputation – in the Americas – of the state-owned Chinese contractor that was handed the job of building it.

Its delay has brought down the credit rating of the Bahamas and locked senior politicians, including the country’s prime minister, in hours of talks in Beijing and at home.

Last month its bankrupt developer, Baha Mar Ltd, headed by Sarkis Izmirlian of the wealthy Izmirlian family, suffered two legal setbacks that could spell the end of its involvement in the scheme, which is estimated to be 97% complete and to need an extra $600m to open.

Major projects often go wrong, but rarely do they sour in quite such a public and spectacular way.

The following timeline shows how Baha Mar was rescued by Chinese funding amid the 2008 financial crisis, and how, after a seemingly smooth construction phase, problems began surfacing in the middle of 2014.

April 2005

Sarkis Izmirlian, son of billionaire Dikran Izmirlian, acquires three ageing hotels on Cable Beach in Nassau with a $200m loan from the Bank of Nova Scotia.

November 2005

Izmirlian announces an ambitious plan to use the site to develop the Baha Mar casino and resort with joint venture partners Harrah’s Entertainment and Starwood Hotels & Resorts Worldwide. The deal represents a $1.6bn investment, and is billed as the largest single-phase leisure development in the Caribbean.

January 2007

Definitive agreements with Harrah’s and Starwood are signed.

Bahamian Prime Minister Perry Christie hails it as “a defining resort project for the Bahamas and the Caribbean”. It would sustain over 7,000 jobs, generate nearly $5bn in tax revenues, and contribute more than $11bn to the country’s GDP over 20 years.

March 10, 2008

Harrah’s Entertainment bails out of the joint venture as the storm clouds of the financial crisis gather, blaming delays in assembling parcels of land and saying “circumstances have changed”.

April 2008

Baha Mar Ltd begins talks with China State Construction Engineering Corporation (CSCEC) and the Export-Import Bank of China (Exim Bank). The Chinese parties had been waiting in the wings. “They were extremely aggressive about wanting to be in the project,” Don Robinson, president of Baha Mar Ltd, later told The Wall Street Journal, adding: “It will help China State Construction prove to the world that they can build a very complex project outside China.”

March 11, 2009

Baha Mar Ltd, the Exim Bank and CSCEC sign a preliminary agreement, under which the Exim Bank would provide financing and CSCEC would be the contractor.

March 30, 2010

Definitive agreement between Baha Mar Ltd, CSCEC and Exim Bank is signed. Under the deal, the Exim Bank would lend the project $2.5bn (later revised to $2.45bn) and CSCEC would assume a minority equity interest of $150m. Pushing the total investment in the resort to $3.5bn was $850m from the Izmirlian family, though that figure would rise to $900m, Baha Mar Ltd would later claim.

July 2010

China’s National Development and Reform Commission, the authority for foreign investment projects, gives its approval for the deal, which triggers the approval-making process in the Bahamian government.

February 21, 2011

Ground-breaking ceremony marks start of construction. The role of general contractor has been assumed by CSCEC’s US subsidiary, China Construction America (CCA). Opening of the resort is set for “end of 2014”.

2014

July 9

CCA workers, numbered at 50 by local media, protest outside the Chinese embassy in Nassau, claiming not to have been paid in six months. The embassy issues a statement urging CCA and the workers to resolve the dispute peacefully, and to “abide by the laws”.

August 1

The biggest obstacle is the utter absence of trust between the developer and the contractor, and between the developer and the government

Baha Mar Ltd announces that the planned December grand opening will be missed. Instead the resort will open in stages and be fully open in “late Spring 2015”. A Baha Mar official tells local media that it was “not uncommon” for projects like Baha Mar to have a phased opening and that the delay had not been caused by construction delays or problems.

October 1

Local contractors complain over payment delays on the Baha Mar project.

2015

January 8

Baha Mar Ltd announces that three of its four hotels will open on 27 March. The fourth would open later. “This dream has been years in the making, and on March 27, 2015, it will finally become a reality,” said Tom Dunlap, Baha Mar’s president.

March 24

Baha Mar Ltd issues an angry statement saying the resort’s opening will have to be pushed back, blaming what it alleges to be inferior quality work by CCA. A new grand opening is set for early May.

April 15

Sarkis Izmirlian criticises CCA at a public meeting of Bahamian chambers of commerce, saying he hoped CCA realised “the discontent, and concerns, about their performance from numerous quarters, including us as owners, the Government of the Bahamas, and the people of the Bahamas”.

Also that week, Prime Minister Perry Christie intervenes, calling Izmirlian, CCA, and the Chinese ambassador in for talks. In that meeting, CCA reportedly admits it slowed progress in the run-up to 27 March because it hadn’t been paid for work in February.

June 29

Baha Mar Ltd applies for protection from creditors under Chapter 11 of the US bankruptcy code in a court in Delaware, US. It is able to do so because one of its 14 affiliate companies is incorporated in Delaware. Under Chapter 11 the developer hopes to avoid liquidation, secure interim financing and try and resolve its issues.

June 30

Baha Mar Ltd says it has commenced a claim in the English High Court in London against CCA’s parent, CSCEC, seeking $192m worth of damages.

July 7

CCA hits out at Baha Mar Ltd, claiming in a statement to be owed $72m for work completed and blaming the developer for mismanagement and design changes.

July 13-15

Bahamian attorney general leads a government delegation to Beijing for talks with all parties, but returns reporting no progress. Among the issues is how to split the cost of completing the resort, and what guarantees are given by the various parties.

July 16

Prime Minister Perry Christie tells the country he has filed a winding up petition against Baha Mar Ltd in the Bahamian Supreme Court, which would force the developer into liquidation. The Exim Bank and CCA also oppose Baha Mar Ltd’s Chapter 11 bid.

July 17

Izmirlian writes to the president of the Exim Bank accusing CCA of making grossly inflated claims for payment and proposing to cut the contractor out of the equation, splitting the cost of finishing the resort between itself and the bank and bringing in Bahamian and other contractors.

July 29

Izmirlian angers government ministers in a radio interview by accusing the government of attacking him personally, and raising the prospect of voters expressing their displeasure at Christie’s handling of the affair at the next election.

August 3

Bahamian minister of foreign affairs and immigration, Fred Mitchell, uses an Emancipation Day speech to criticise Swiss-born Izmirlian for attacking the government, and warns him to behave as an “economic guest” should.

August 4

Labour minister Shane Gibson tells the House of Assembly that foreign developers should have “psychological evaluations”.

September 4

After two adjournments, the Bahamian Supreme Court appoints provisional liquidators for Baha Mar Ltd, but limits their remit and adjourns further proceedings until 2 November. The court had earlier declined to recognise the developer’s Chapter 11 bid.

September 15

US bankruptcy court in Delaware dismisses Baha Mar Ltd’s application for protection from creditors under Chapter 11.

September 23

CCA returns to Baha Mar site to assess the work needed to complete the project.

What now?

The possibility of resolution by dialogue seems remote. The biggest obstacle is the utter absence of trust between the developer and the contractor, and between the developer and the government. Baha Mar Ltd has even alleged collusion between the government and the Chinese entities.

Baha Mar Ltd’s chances of avoiding liquidation, seem to have faded as well, leaving open the question of who, in the end, will own Baha Mar.

30 October

Bahamian Supreme Court appoints Deloitte & Touche LLP as receiver to Baha Mar in a move that further isolates Sarkis Izmirlian.

18 November

Sarkis Izmirlian and fellow board directors reported to have resigned en masse from Baha Mar Ltd. the previous week.

2016

22 March


Receivers for Baha Mar reported to have hired Canadian property firm Colliers International to try and find a buyer for the scheme in a bid to end an the impasse.

26 May

Bahamian prime minister Perry Christie says China Exim Bank has agreed further financing with CSCEC, paving the way for CSCEC’s subsidiary, China Construction America (CCA), to resume work on Baha Mar. Nine purchase offers reported to have been submitted to receivers but details of the offers not disclosed.

22 August

In a televised address Prime Minister Perry Christie announces the government and the China Exim Bank have entered into an agreement to have Baha Mar completed and sold to a “world-class hotel and casino operator”, with CCA to resume construction in September.

Top photograph: Sealing the deal on 30 March, 2010: from left, Export-Import Bank of China vice president Li Jun, Sarkis Izmirlian, and China State Construction vice president Liu Jinzhang (Source: China Construction America)