Baha Mar Plans Deal Close For 2010 Q2

Baha Mar's $2.6 billion Cable Beach redevelopment project was yesterday said to be "back on track" and targeting an early second quarter 2010 agreement close with its Chinese partners, with completion of the project financing now the major focus.

This newspaper understands that after a one to two-week pause, while the parties overcame issues relating to how much equity cash they would put into the deal, plus the break for Chinese New Year, Baha Mar and its partners, the China Export-Import Bank and China State Construction, are moving forward again.

Tribune Business was told by sources who have connections to those working on the deal that the two Chinese state-owned entities had been making "big demands" of Baha Mar, which is owned by chairman and chief executive, Sarkis Izmirlian, and his Lyford Cay-based family.

It was suggested that these demands related to the amount of equity capital to be invested, with the Chinese companies wanting to see Baha Mar and the Izmirlian family put down a certain amount of cash on the table upfront.

And, as previously reported by Tribune Business, Scotiabank has also been pressing for repayment of the original syndicated loan that financed Baha Mar's original acquisition of the Wyndham and Sheraton Nassau Beach properties from hotelier Philip Ruffin.

The bank had been wanting the Izmirlian family to pay down "in excess of $50 million" on that loan facility, and had twice extended deadlines - firstly, from end-2009 to end-January 2010, and then to end-March 2010.

However, Tribune Business understands that these issues have now either been overcome or resolved satisfactorily, and that both Baha Mar and China State Construction/China Export-Import Bank are moving forward in a bid to close their agreement for the Cable Beach strip's redevelopment.

Sarkis Izmirlian told Tribune Business in an exclusive interview earlier this year that all commercial issues surrounding the project had been resolved, and this neswspaper now understands that the remaining work largely focuses on completing the project debt financing, perfecting its security on the numerous land parcels that comprise the Baha Mar development, and completing the drafting of legal documents.

Well-placed sources suggested yesterday that the transaction could be completed by early in the 2010 second quarter, possibly in April or, at the outside, late May or early June.

Robert Sands, Baha Mar's senior vice-president of external and governmental affairs, declined to be drawn on any timeline for the agreement's completion yesterday, although he indicated the project was on track.

"We continue to make good progress, and we're very hopeful that we can bring this matter to a conclusion as soon as possible," Mr Sands told Tribune Business.

"We're on track to complete the financing for the Baha Mar project, as we have announced previously, and to begin construction as soon as possible upon completion of the financing."

Tribune Business understands that once the agreement with the Chinese is finalised, Baha Mar will then present the Government with its final development plans for the Cable Beach strip.

First stage construction will involve the West Bay Street re-routing; the Commercial Village, which will house the re-located Straw Market, commercial banks and government buildings lining the southern side of the existing road, and other buildings. Previous estimates pegged that work's costs at around $115 million.

"All the construction drawings and design drawings are done," Mr Izmirlian told Tribune Business previously. "We have bid out, and are in the final stages of negotiating, the contracts for the Commercial Village and the road. Within weeks of signing [with the Chinese] I believe construction will start and create jobs for Bahamians.

"If the labour is available, and depending on what happens on New Providence with projects such as the airport redevelopment, you're looking at probably close to 2,000-2,500 Bahamian jobs during construction, and that's going to have a significant impact on the local construction industry. It's tens of millions of dollars and hundreds of Bahamian jobs being created within months."

Mr Izmirlian said Baha Mar was targeting a "three-and-a-half year build out", meaning that the Cable Beach strip's redevelopment would be completed in late 2013 or early 2014.

Source: The Tribune