Potential bidders for the stalled Bahamian mega resort, Baha Mar, have been banned from speaking to the scheme’s developer, Sarkis Izmirlian (pictured), and the contractor, China Construction America (CCA).
The ban is necessary to maintain a ‘level playing field’ between bidders, receivers Deloitte & Touche have said, but the stricture has raised questions over the due diligence process in the sale of the $3.5bn hotel and casino complex.
Last week GCR reported that receivers for the Chinese-funded resort hired the Canadian property firm Colliers International to try and find a buyer for the scheme, which is said to be 97% complete.
Potential buyers must pay $50,000 to gain access to an electronic "data room" containing information on the project, and sign a non-disclosure agreement governed by Bahamian law.
Clause 18 of the non-disclosure agreement, which is appended to a promotional document produced by Colliers, prohibits bidders from contacting either Izmirlian or CCA, or their respective executive teams, employees and advisers without written consent of the receivers.
Bidders are also barred from speaking to Baha Mar’s "creditors" and "suppliers", meaning they are unable to communicate with Bahamian contractors who worked on the project, mostly small companies who are collectively owed $74m for work done.
For the receivers, Raymond Winder of Deloitte & Touche told newspaper The Tribune that the ban was intended to give everyone "access to the same information".
"The issue really is to control the information, and ensure the information is consistent from one bidder to the next. That’s the primary reason," Winder said.
He added: "If we allow a bidder to ask questions [of Sarkis Izmirlian and CCA] and don’t know what they are, and someone else doesn’t, that first bidder will have access to information that other bidders don’t."
Winder said the receivers would be adding information to the ‘electronic data room’ constantly, allowing bidders to conduct due diligence.
But an ex-Baha Mar director said the ban hurt the transparency of the sales process.
Speaking to The Tribune, Dionisio D’Aguilar questioned how bidders would be able to conduct proper due diligence if they could not speak to the two parties who knew most about Baha Mar’s condition.
"If you’re going to buy a product, you go to the person selling it, but you also want to speak to the people involved. Why would the court approve this?" he said, adding: "You would be crazy to buy this without talking to the original developer.
- For background, see: Tribulation timeline: The history of the Baha Mar resort
Photograph: In happier days, Baha Mar Ltd. chairman and chief executive Sarkis Izmirlian (seated, middle) sealing the development deal in 2010 with Export-Import Bank of China vice president Li Jun, seated on left, and China State Construction vice president Liu Jinzhang (Source: China Construction America)