Sarkis Izmirlian (pictured), the billionaire’s son who staked his reputation on creating the biggest leisure scheme in Caribbean history, has resigned as chairman and chief executive of developer Baha Mar Ltd., along with all fellow directors on the board.
The mass exit confirms that the fate of the stalled $3.5bn Baha Mar resort, which Izmirlian began developing in 2005, now lies solely in the hands of a Chinese state-owned bank, the Export-Import Bank of China (Exim Bank), which lent the scheme $2.45bn in 2010.
It follows the Bahamian Supreme Court appointing Deloitte & Touche LLP as receiver to the developer on 30 October, and the Supreme Court appointing provisional liquidators in September.
"We were directors of a company owned by Sarkis Izmirlian, and he no longer runs it, so it’s only fitting that we step aside," a friend of Izmirlian and himself a former Baha Mar director, Dionisio D’Aguilar, told local newspaper The Tribune this week.
"We don’t meet any more, we don’t talk, and Sarkis is not involved in the property since it’s been in the hands of the liquidators, so there’s nothing else for us to do."
Everybody is finding out what we already knew: That dealing with a Chinese bank that is state-owned, government-controlled, is not an easy undertaking.– Dionisio D’Aguilar, former Baha Mar director
D’Aguilar said the future now looked bleak for 120 local contractors who together are owed $74m for working under the main Chinese contractor on the mega hotel and casino scheme, which is said to be 97% complete.
"To add insult to injury, Bahamian contractors and creditors are now waiting on what the bank is going to do," he told The Tribune. "[Bahamian Prime Minister Perry] Christie says he’s going to make sure he pays them off. I don’t believe that. You can’t make them."
He added: "We are swimming in the wilderness, and are beholden to a Chinese bank. It’s a very unfortunate situation. Everybody is finding out what we already knew: That dealing with a Chinese bank that is state-owned, government-controlled, is not an easy undertaking. They’re slow decision-makers, and are not motivated by what traditional banks are motivated by."
A number of potential investors are reported to be interested in taking over the resort, including the veteran of Bahamian hotel development, Sol Kerzner.
But sources familiar with the scheme told The Tribune that outright buyers would be deterred by the $2.45bn owed to the Exim bank and the amount needed to finish the resort and get it open for business – a figure that has been estimated at $600m, but which could be closer to $1bn, according to The Tribune’s sources.
The scheme’s debt position raised the likelihood that only Chinese investors would be in a position to take the resort over, backed by cheap financing at home, the sources said.
Sarkis Izmirlian, son of billionaire Dikran Izmirlian, began developing the Baha Mar resort after acquiring properties on Cable Beach in Nassau in 2005.
Sarkis Izmirlian (Baha Mar)
The financing deal with the Exim bank was signed in 2010 after a former development partner, Harrah’s Entertainment (now Caesar’s Entertainment), bailed out in 2008.
As part of the Exim bank deal, the job of building the resort was given to China State Construction Engineering Corporation (CSCEC), which also invested $150m in the scheme. The Izmirlian family has invested between $850m and $900m.
CSCEC delegated construction to its American subsidiary, China Construction America, which broke ground in February 2011.
After missing opening targets of December 2014 and then March 2015, Baha Mar Ltd. sought protection from creditors under Chapter 11 of the US Bankruptcy Code on 29 June.
It blamed CCA for delays and poor workmanship. CCA countered by accusing Baha Mar Ltd. of mismanagement.