Receivers seek buyer for unfinished Baha Mar resort

6 April 2016

Volume 39, Number 13

The receivers of Baha Mar, the as yet to be completed US$$3.5bn mega resort in the Bahamas (see Caribbean Insight January 20, 2016 for full background), have begun to seek potential buyers though a Canadian real estate firm Colliers International.

In an interview with the online Bahamas publication, Tribune 242, the Managing Partner of the receivers, Deloitte & Touche (Bahamas), Raymond Winder, said that he hoped that the decision would give Bahamians a sense that there was light at the end of the tunnel.

Mr Winder said that that the appointment of Colliers International and the launch of the sales process had been approved by the Bahamas Supreme Court. He told the publication that if a buyer could be identified it would address a number of problems. “It solves the ownership issue, and it also solves the construction issue, in terms of the completion of the project,” he said, “so this is a very important step.”

He said that the receivers and the financiers of the project, China Export-Import Bank, had still to decide who will be responsible for completing the construction of the project. “That could be the purchaser or it could be an independent third party, depending on how long it takes to identify a purchaser,” Mr Winder told Tribune 242.

It remains, however, far from clear how much money will be required to complete the project or where it will come from.

Although Sarkis Izmirlian, the developer, had saidin June 2015 when the companies involved filed

for Chapter 11 bankruptcy protection that the project’s construction was 97% complete, the Bahamas Prime Minister, Perry Christie, said in late 2015 that the costs involved had mounted to around US$600m.

Since then some reports have suggested that if this remedial cost is accurate, if marketing costs are added and the various restaurant, casino and other franchise arrangements are to be kept in place, a buyer would have to spend around US$1.5bn to have the hotel fully ready to open.

Where thi s new financing is to come from and what effect it will have on the price offered by any buyer remains to be seen.

Colliers International website says that to gain access to an electronic data room containing the information on Baha Mar, potential bidders must sign a non-disclosure agreement and pay a US$50,000 non-refundable fee.

The Bahamas Tribune reported separately that potential buyers bidding on the unfinished resort will be banned from talking to developer Sarkis Izmirlian and any of his former executives as well as the project’s primary contractor, China Construction America (CCA).

The decision to restrict access to Mr Izmirlian, CCA, and their respective executive teams, employees and advisers as well as to creditors and suppliers, is outlined in the non-disclosure agreement. According to Deloitte & Touche this is to create a level playing field and to prevent bidders from gaining advantage in terms of acquiring key details of the resort’s current condition.

The decision raises questions about how a potential bidder will be able to make a well informed judgement on a purchase price.

 

This is an extract from the Caribbean Council’s leading weekly editorially independent publication, Caribbean Insight, which provides in depth information on current economic, political and commercial developments in the Caribbean and news on events in Europe and the US that affect the region. Business people, academics, and those with a general interest in the Caribbean find it an invaluable tool for developing and maintaining knowledge and providing an insight into political, economic and commercial events in the region.

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