Receivers for the stalled, Chinese-funded mega resort in the Bahamas – Baha Mar – have hired the Canadian property firm Colliers International to try and find a buyer for the scheme in a bid to end an impasse that is hurting the economy of the tiny Caribbean nation.
Raymond Winder, Deloitte & Touche (Bahamas) managing partner, told Bahamian newspaper The Tribune that the move would give Bahamians "the sense there’s light at the end of the tunnel".
A $3.5bn casino and resort complex, Baha Mar was due to open in December 2014, but missed that and a March 2015 deadline. A legal battle erupted on 29 June last year when developer Sarkis Izmirlian sought protection from creditors under Chapter 11 of the US Bankruptcy Code.
It gives the sense that there’s light at the end of the tunnel– Raymond Winder, Deloitte & Touche
Shortly afterwards the developer commenced a claim in the English High Court in London against China State Construction Engineering Corporation Limited (CSCEC), the state-owned parent of China Construction America Inc. (CCA), whose Bahamian subsidiary is main contractor on the beleaguered project.
Izmirlian’s Chapter 11 bid failed and the resort is now controlled by the China Export-Import Bank, which lent $2.45bn to the finance the scheme.
When it filed for Chapter 11 bankruptcy protection, the developer said the project’s construction was 97% complete, but Bahamian Prime Minister Perry Christie has said that the cost of completing the resort had risen to $600m.
Speaking for the receivers, Raymond Winder said the China Export-Import Bank had not decided who would be responsible for finishing construction.
"That hasn’t been decided," he told The Tribune, "but we have been exploring all avenues to begin the process of [construction] mobilisation."
He added: "That could be the purchaser or it could be an independent third party, depending on how long it takes to identify a purchaser."
Winder said Colliers’ appointment would show Bahamians that he and his fellow receivers were "not just sitting here".
"At least it gives individuals a sense that we’re moving the process forward, and we’re not just sitting here," he said. "It gives the sense that there’s light at the end of the tunnel, and we’re doing things to ultimately move the project forward."
But he added that Baha Mar was that largest and "most complicated" receivership/liquidation case he had handled in his career.
Meanwhile, Izmirlian and his allies are calling for the Bahamian Supreme Court to approve a process whereby he can pursue his $192m claim against CSCEC in the English High Court without the involvement of the China Export-Import Bank.
Izmirlian’s allies allege that the receivers have no interest in pursuing the claim because both their client, the Chinese bank, and the contractor, CSCEC, are owned by the Chinese state.
Prime Minister Christie, who has faced criticism for his handling of the matter, has repeatedly assured the Bahamian public that big investors were interested in taking on Baha Mar, but none have yet stepped forward.
The affair has become a divisive political issue. Approximately 2,000 people hired by the developer as staff for the resort were laid off last year, causing a spike in the country’s already high unemployment rate.
In September last year ratings agency Standard & Poor’s lowered the country’s investment grade to just above so-called "junk" status partly because of the troubled resort.
Property tycoons Andrew Farkas and Sol Kerzner were last year reported to be close to a deal to take over the resort, but talks failed to conclude an agreement.
Colliers has released a ‘teaser’ document to attract potential buyers, in which it says Baha Mar is "substantially complete".
The document says the project "has commanded the attention of the Government of the Bahamas, which is willing to provide special assistance for the opening of the resort", without specifying the nature of the "special assistance".
Colliers also said "good relationships between the Bahamian and Chinese governments, where an airline framework agreement and visa waiver agreement are in place, augurs well for future direct flights from China to the Bahamas".
Potential buyers will have to pay a $50,000 nonrefundable deposit to gain access to an electronic "data room" containing information necessary for them to conduct due diligence on Baha Mar. They must also sign a non-disclosure agreement, to be governed by Bahamian law.
Top image: The Baha Mar resort depicted on Colliers’ teaser promotional document (Colliers International)