Last updated: 11:51 AM ET, Fri October 28 2016

Hong Kong Firm Says It Is Negotiating To Buy Baha Mar

Hotel & Resort Brian Major October 28, 2016

Hong Kong Firm Says It Is Negotiating To Buy Baha Mar

Photo courtesy of Baha Mar

Nearly two years after its opening was halted by repeated delays that prompted a precipitous plunge into receivership, a Hong Kong-based firm has entered negotiations to purchase shuttered $3.5 billion Baha Mar mega-resort.

In a statement issued Thursday, officials at Chow Tai Fook Enterprises Limited (CTFE) said the firm has applied to the Bahamas government to acquire Perfect Luck Assets Limited (Perfect Luck), the “special purpose vehicle” created this month by Baha Mar financier China Export-Import Bank (CEXIM).

CTFE companies include interests in real estate development and hotel and casino, operations. A key CTFE subsidiary is Rosewood Hotel Group, which had planned a Baha Mar property hotel to open in December 2014 as part of the resort. Rosewood later withdrew from the development amidst its spiral into bankruptcy, fearful the episode had “tarnished” its brand.

CTFE officials will “re-engage Rosewood Hotel Group as a luxury hotel operator at Baha Mar” and are “already in discussions” with Hyatt and SLS Hotels, the other Baha Mar hotel companies, they said Thursday.

“CTFE is looking forward to having Baha Mar join its portfolio of world-class integrated resort development projects," said Dr. Henry Cheng, the firm’s chairman. “We are fully committed to this project and plan to hire as many Bahamians as possible to work at the property.”

Cheng said the firm would “work with the government to achieve the goal of a phased opening” and “will invest millions” on pre-opening activities and employment in advance of the project. He said a non-disclosure agreement prevented his firm from discussing details of the agreement. Bahamas Ministry of Tourism officials did not respond to requests for comment.

CTFE’s involvement may confirm local media reports that suggested CEXIM/Perfect Luck would ultimately select a Chinese firm to purchase Baha Mar. It is unclear if CTFE was identified through the bidding process established by the bankrupt resort’s receivers, a scenario Sarkis Izmrlian, the resort’s original developer, described this week as “an intricate fabrication.”

Yet the procedure through which a deal is struck may ultimately prove moot. While Izmirlian has doggedly sought to re-purchase Baha Mar, he says CEXIM and the project’s contractor, China Construction America (CCA), both owned by China’s government, have consistently sought to exclude BMD from the bidding process.

“BMD reiterates that it is pursuing its proposal to CEXIM to purchase Baha Mar at a price higher than that which CEXIM or the CEXIM-related entity, Perfect Luck Assets Limited ("Perfect Luck"), may be able to obtain from any other possible buyer,” company officials said Thursday.

“BMD further notes that the press release issued by Chow Tai Fook Enterprises clearly states it has not reached any agreement with CEXIM or Perfect Luck regarding its potential purchase of the Baha Mar asset but rather that it only has ‘entered into negotiations’ in this regard and provides no financial details."

The statement adds, “If indeed Chow Tai Fook Enterprises and CEXIM/Perfect Luck are in negotiations, then it can only serve the interests of the seller and The Bahamas to have a competitive process to achieve the best outcome. BMD stands fully prepared to engage with the seller to achieve such."

Brian Major