Baha Mar Impasse 'Progress' Depends on Perspective
Top Bahamas government officials departing Beijing Tuesday reported “considerable progress” in negotiations to broker an agreement among developer Baha Mar Ltd., China State Construction Engineering Corp. (CSCEC) and China Export Import Bank (EXIM) that would complete construction on the stalled $3.5 billion Baha Mar mega-resort.
But determining what defines “progress” depends heavily on the party providing the perspective. For its part, the Bahamas government delegation led by attorney general Allyson Maynard Gibson maintains that “commercial terms” of an agreement are in place. A financial guarantee from the project’s developer is the only element needed to close the deal, they said Tuesday evening.
“The remaining major point of difference between the parties is Baha Mar’s refusal to provide their part of a guarantee required by EXIM to secure a commitment of additional lending to enable completion of the project,” government officials said in a statement.
Now approaching eight months beyond its original launch date, the Nassau mega-resort’s construction stalled when the developer effectively ran out of money. Accordingly, the parties have proposed new financing terms, Bahamas officials said.
“The new financing proposed for Baha Mar would include $200 million in new lending by EXIM,” the government’s statement said. “EXIM has insisted that its new $200 million credit extension be guaranteed by [CSCEC] and/or [Baha Mar Ltd.].”
In turn, Baha Mar Ltd. has offered to provide a $25 million letter of credit, with CSCEC offering to guarantee the remaining $175 million on the condition that it receives a corresponding guarantee from Baha Mar, said Bahamas officials.
However Baha Mar Ltd. “has declined to provide any guarantee apart from the $25 million letter of credit,” said the Bahamas officials. Instead the developer has proposed the Bahamas government provide EXIM with a “sovereign guarantee” of up to $175 million.
In their statement, Baha Mar officials did not release details of their most recent proposal. Yet it’s clear company officials are not on board with the government’s interpretation of the negotiations.
“Baha Mar has made very viable proposals and discussions between the parties are continuing,” they said late Tuesday. “We are hopeful that a productive outcome will result.
“We continue to be disappointed by the government’s posturing and attempts to score political points under the pretense of being neutral observers in our ongoing discussions in China,” they added. “The latest statement by the government is apparently constructed to suit [their] agenda and reputation.”
In its own statement, China Construction America (CCA), the CSCEC affiliate in charge of the resort’s construction, agreed with the Bahamas government’s outline of the talks.
“We offered to invest an additional $100 million in Baha Mar,” CCA officials said. The firm also offered to provide “a financial guarantee of $175 million to EXIM” to satisfy the bank’s requirement that its $200 million loan be fully guaranteed, they said.
CCA officials furthermore requested Baha Mar chief executive Sarkis Izmirlian extend “a personal guarantee” of $100 million to the firm.
“We offered Mr. Izmirlian the option of providing his personal guarantee in any number of ways, including in the form of pledged collateral,” said CCA officials. “Our offer was rejected. This is precisely the reason a deal was unable to be consummated.”
Meanwhile a concrete resolution to the continuing impasse seems far off, although all sides say they continues to seek an agreement that will allow the resort to open this year.
Bahamas government officials said most recent talks ended Tuesday “with the parties agreeing to continue discussions among themselves,” although each side “might continue to pursue other legal options.”
Said Baha Mar officials, “These discussions are, simply put, not about politics but rather achieving a resolution so Baha Mar can be properly completed and opened. We are hopeful a productive outcome will result."
CCA officials added, “We stand ready to move forward in concert with any and all parties to get this project back on track as quickly as possible.”
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