Talks in China ended with Baha Mar CEO Sarkis Izmirlian making a proposal for the Bahamian government to provide the Export-Import Bank of China with a “sovereign guarantee” of up to $175 million.
According to a statement released by the government yesterday, while progress was made on the commercial terms of an agreement between Baha Mar and China State Construction Engineering Corporation, the major point of difference between the parties is Izmirlian’s refusal to provide his part of a guarantee required by EXIM bank to secure a commitment of additional lending to enable the completion of the resort.
As a result of the talks, the new proposed financing for Baha Mar would include $200 million in new lending by the EXIM bank, which insisted that this credit extension be guaranteed by the contractor or the developer.
Izmirlian, who is also the developer of the Baha Mar project, also proposed to provide a standby letter of credit to back $25 million of the new $200 million credit extension.
The contractor has offered to guarantee the remaining $175 million on the condition that it receives a corresponding guarantee by the developer.
In addition, the contractor agreed that the amount of the guarantee could be limited to $100 million.
However, Izmirlian refused to provide any guarantee, apart from the $25 million letter of credit, and has proposed as an alternative that the government provide EXIM bank with a “sovereign guarantee” of up to $175 million in place of any guarantee by the contractor.
Also during the talks, held July 26 – 28, EXIM bank urged the parties to arrive at an agreement and pointed out that the contract documents between the parties stipulates that cost overruns should be borne by the developer and that the contractor should finish the project.
“The contract documents were drafted in this manner so that the project would be completed and the parties would then be free to pursue remedies against each other in the courts. As EXIM indicated, Baha Mar has decided not to complete the project in accordance with the contract documents,” the statement read.
However, Attorney General Allyson Maynard-Gibson, who led the Bahamian delegation to China, reiterated during the talks that the government’s sole objective was to remobilize the Baha Mar project as soon as possible with a view to complete and open the resort in the shortest timeframe.
“The government prefers agreement between the parties which is why the prime minister asked the delegation to return to Beijing for a second attempt at a negotiated settlement in the context of four party talks. Useful bilateral discussions were held between the parties on the way forward for completion of the project as soon as possible,” the statement read.
The talks ended with the parties, Baha Mar, EXIM bank, CSCEC and the Bahamian government, agreeing to continue discussions among themselves.
It was understood that the parties might continue to pursue other legal options.
The Bahamian delegation is on its way back home and will update the prime minister and Cabinet at its earliest opportunity concerning the matter.
