Last updated: 08:48 PM ET, Wed October 26 2016

Baha Mar Finally Has a Buyer, But the Old Owner Isn't Letting Go

Hotel & Resort | Tim Wood | October 20, 2016

Baha Mar Finally Has a Buyer, But the Old Owner Isn't Letting Go

PHOTO: A majestic view of what the Baha Mar resort could be. (photo via Facebook/Baha Mar)

One of the wildest stories in the history of mega-resort building in the travel industry has taken a peculiar new turn.

Bahamas Prime Minister Perry Christie promised in August that a "world-class hotel and casino operator" was going to be announced as the buyer. Instead, Christie announced this week that an arm of the company on the hook for the money-bleeding $3 billion-plus project is the new buyer.

The lucky new owner? The aptly-named Perfect Luck Holdings. 

The sale comes after months of contentious back-and-forth between Bahamian government officials, the former owner of Baha Mar, Sarkis Izmirlian, and the primary lender, the Export-Import Bank of China (CEXIM). Now, Christie and other government officials are telling Izmirlian that if he hopes to get control of the project once again (as he has promised he'd do for months with a Trump-esque bravado), he will have to negotiate with officials from Perfect Luck, which is a "special purpose vehicle" of CEXIM.

In announcing the sale, Christie first referenced what he saw as outlandish claims and preposterous public pandering by Izmirlian. 

"The Prime Minister received a copy of a recent letter written by Mr. Sarkis Izmirlian to Vice Chairman and President Liu Liange of the Export-Import Bank of China (“CEXIM”) which he made public in a press release.  The letter and the press release contain some extraordinary statements," the statement said. "Normally the Government would not respond to such a letter and statement but so far as it impacts on what the Government has achieved, which is well documented, in ensuring that the Baha Mar development is finished and Bahamian creditors paid, the Government is compelled to give this statement.

"The assets of Baha Mar have been acquired by Perfect Luck Holdings Limited (“Perfect Luck”). The sale followed a lengthy marketing process by the Receivers, and that process and the resulting sale of the assets to Perfect Luck were overseen and approved by The Bahamas Supreme Court.

"Now that the assets are owned by Perfect Luck, that company may sell the resort to whomever it wishes, subject to the proposed purchaser being acceptable to the Government and other bodies performing their public function."

The Bahamas then went on to essentially call Izmirlian's bluff.

"At each stage of the process (which commenced when Baha Mar’s developer, Sarkis Izmirlian, without any prior notice, arranged for the Baha Mar companies to file Chapter 11 bankruptcy proceedings in the United States), Mr. Izmirlian has had the opportunity to participate in discussions and the process surrounding the future of the resort. 

"If, as he states, Mr. Izmirlian is in a position to, and wishes to work with CEXIM to deliver Baha Mar for the Bahamian people, then he should engage seriously with Perfect Luck and its advisors. If he is in a position to make a credible proposal to acquire Baha Mar from Perfect Luck, then he is free to do so," the statement said.

READ MORE: Follow the Entire Battle for Baha Mar Here 

For now, this appears to give Baha Mar a pulse and a hope of eventually opening. Bahamas officials say that construction to finish the 1,000-acre beachfront resort resumed in September. CEXIM is working to pay off creditor claims and to pay former Baha Mar employees who went months without paychecks before finally being told the project was on hold.

"After much hard work, the project is back on track - re-mobilisation has commenced and through high level good faith negotiations a substantial fund has been established by CEXIM for the payment of creditors’ claims and former Baha Mar Bahamian employees are already being paid," the official statement said. "Those were two of the Prime Minister’s three stated primary objectives and they have been achieved. The third objective is to ensure that Baha Mar is sold to a world class hotel and casino operator. The Government of The Bahamas will continue to work tirelessly to ensure that this objective is fulfilled, in the very best interest of the economy and the people of The Bahamas." 

Baha Mar initially broke ground in 2011, and was slated to open in the summer of 2014. At first, the project was delayed until early 2015, followed by a series of pushbacks of the opening date until finally, Izmirlian and Bahamas officials admitted the extent of the financial issues causing the delay. At that point, the two sides began finger pointing at each other and at contractors, leading to Izmirlian looking for U.S. bankruptcy court protection to hold on to ownership of the resort. That led to 2,000 staffers being laid off in September 2015, months after they had received any kind of payment for their work.

If and when Baha Mar opens, it is designed to include five hotels housing 2,200 rooms, a casino, a 200,000 square-foot convention center and a golf course designed by Jack Nicklaus.

Hyatt Hotels and the SBE Entertainment Group have re-committed to opening hotels within Baha Mar. Bahamas officials are hoping to re-engage former partners to come back to the project and/or attract new hoteliers to reach the finish line with them.

For his part, Izmirlian is posturing as if he's still a major player in the progress -- albeit one with a serious case of sour grapes.

He said his offer "would be superior in all respects to the previously reported potential sale by the bank to an undisclosed Chinese party.”

“We are prepared to move forward immediately with a formal offer at a price in excess of the current undisclosed offer. We will pay 100 percent of all substantiated Bahamian claims and all monies owed to Bahamians and Expat employees. We will drop all of our appeals and legal actions in effect within the Bahamian Courts upon acceptance of our offer. We have the full funding necessary in place for such a purchase price,” Izmirlian said in an Oct. 10 letter to CEXIM officials.

Izmirlian also alleged that the bidders from Perfect Luck were being given an eased set of conditions in making their bid.

"“This is very important and surprising. As you must be aware, we previously were advised on multiple occasions by your receivers that all offers were required to be tendered through the receivers’ process, and the multitude of bona fide offers we have made were not considered because of that. In fact, if our offers had been considered, it is very likely that Baha Mar would be open today, employing thousands of Bahamians,” said Izmirlian.

Still, Izmirlian contended that his offer was still the one Bahamas and CEXIM officials should be paying most attention to.

“Since the potential acquisition of Baha Mar by an unidentified party via an offer outside the Receivers’ process is now what CEXIM is entertaining, we hereby submit the offer, which we are confident is both far superior economically and in the best interest of The Bahamas,” he said.

“My team can conclude this transaction with CEXIM with the fewest surprises in the shortest period of time. We can complete Baha Mar with the soonest opening of all other options. We are in the best position to re-engage the people of The Bahamas as passionate supporters of Baha Mar and its stakeholders. And we can pay the highest price for the benefit of the bank and all its stakeholders.”

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