Baha Mar Apealing In Harrah’s Case

In its February 18, 2010, pre-argument statement, Baha Mar and its New York attorneys, Davis, Polk & Wardwell, said the other substantive grounds for their appeal were that Judge Charles Ramos “improperly resolved disputed issues of material fact on summary judgment, improperly decided triable issues as to both the contract and tort claims, erred in concluding that Caesars Bahamas is entitled to fee-shifting under the Subscription Agreement, and abused its discretion”.

The dispute between Baha Mar on the one hand, and its former partner in the $2.6 billion Cable Beach redevelopment, Harrah’s Entertainment and its Caesars Bahamas Investment Corporation on the other, is a sideshow to the former’s efforts to conclude a replacement deal with China Export-Import Bank and China State Construction.

Running parallel to that, too, are Baha Mar’s negotiations over the original syndicated loan, headed and put together by Scotiabank, that helped to finance the existing properties’ purchase from Philip Ruffin.

Tribune Business understands that while Scotiabank had been pushing for Baha Mar to conclude its agreement with China by 2009 year-end, to coincide with when the loan facility matured, it ultimately extended that twice to end-January 2010, and now to the end of March 2010.

It is understood that Scotiabank wants Baha Mar chairman and chief executive, Sarkis Izmirlian, and his family to pay down more than $50 million on that loan. The Izmirlians, though, are reluctant to do that, sources say, until the deal with China becomes a certainty.

Back with Harrah’s, Judge Ramos in his judgment found that Harrah’s and its Caesars Bahamas Investment Corporation subsidiary “validly exercised their right to terminate” the joint venture agreement with Baha Mar, and that the latter “has no obligation to consummate” the deal to redevelop the Cable Beach strip.

Baha Mar’s claim for fraud against Harrah’s and Caesars Bahamas was also dismissed, the judge finding that there was no evidence they “knowingly intended to deceive” over their intentions not to consummate the joint venture and walk away from the project.

This allegation, the judge said, was premised on the claim that despite agreeing to the Supplemental Heads of Agreement that Baha Mar signed with the Bahamian government on January 31, 2008, Harrah’s concealed that its private equity owners, Apollo and Texas Pacific, had already decided not to proceed.

This decision was allegedly made at a Harrah’s meeting three days earlier, on January 28, 2008.

However, Judge Ramos found: “Baha Mar’s fraud claim fails because it is unsupported by any evidence that Caesars Bahamas and Harrah’s knowingly intended to deceive Baha Mar with respect to unconditionally going forward with the project.

“There is simply no evidence that Caesars Bahamas and Harrah’s made a definitive decision on January 28, 2008, to abandon the project, while agreeing to the execution of the Supplemental Heads of Agreement just days later.”

Source: The Tribune