Bahamas News

In what could be described as an attempt to save the Baha Mar deal, Prime Minister Hubert Ingraham announced in the House of Assembly on Monday that his government would proceed with the Baha Mar approvals process as though the developer had a joint venture partner.

Mr. Ingraham said his administration would, by this process, seek to put Baha Mar on the best possible footing to either attract a new joint venture partner or revive its relationship with Harrah’s.

Much has been made of the prime minister expressing his doubts in the House of Assembly last week about the ability of Baha Mar to finance the redevelopment project.

Harrah’s, for example, cited the remarks as part of its reason for pulling out, and the Official Opposition PLP says the PM’s remarks were “reckless.”

Mr. Ingraham defended his remarks of last week by tabling correspondence between Harrah’s, Baha Mar and the government of The Bahamas that called into question the ability of the Cable Beach redevelopment to go forward.

He tabled a March 6 letter from Harrah’s Vice Chairman Charles Atwood to Baha Mar, laying out some of the casino giant’s issues, which states right off the bat that Harrah’s has concluded after lengthy evaluation that the Baha Mar project is unlikely to succeed as currently structured.

Harrah’s cited “long delays in reaching agreements with the government on completing the assemblage of the relevant land rights” as cause for “considerable doubt about whether the project could be financed at all.”

“These delays also raise grave concerns about increased cost and risk, and create apprehension about your ability to execute in a timely manner. When coupled with Prime Minister Ingraham’s comments to the House of Assembly (on Thursday) we do not believe the land will be delivered to the joint venture as planned,” Mr. Ingraham quoted, reading from the letter.

“As you are aware,” he continued to read, “this issue has been of utmost importance to us from the inception of our negotiations, as without these land conveyances the project cannot proceed.”

Mr. Ingraham read the entire letter into the record, which concluded by noting that there were a number of conditions between Harrah’s and Baha Mar that had gone unmet.

The prime minister characterized his remarks made last week as an attempt to address unrealistic expectations.

“There has been a lot of hype about the Baha Mar project, and expectations for the project and from the project are high on the part of many persons in The Bahamas,” he said.

“Knowing what I knew last Wednesday, I sought to begin to dampen public expectations of a project whose commencement was likely at best to be delayed. In doing so, I chose to state an incontrovertible fact: I was not satisfied that the funding arrangement for the project was in place.”

Mr. Ingraham differentiated carefully between his concerns about the challenge in financing the Baha Mar project versus the financial soundness of the principals of the project, the multimillionaire Izmirlian family.

The prime minister explained that until he got a phone call and later an email last Monday night (March 3), the government had no idea that there were difficulties between Baha Mar and Harrah’s. He explained that plans for a March 18 groundbreaking ceremony featuring Baha Mar, Caesars and Harrah’s executives had been scheduled that day.

“That same night, just after 8pm, I was telephoned at my home and informed that Harrah’s was reconsidering its involvement in the project in light of ‘the prevailing financial climate’ and that ‘the new owners of Harrah’s were considering walking away from the deal in The Bahamas,’ and that ‘a decision was likely to be made within 48 hours of Monday the 3rd of March,’” Mr. Ingraham said.

“That’s before I spoke in the House. Two days before we came to the House to speak.”

Apollo Management and Texas Pacific Group are the new owners of Harrah’s having bought the company for tens of billions of dollars, and taking it private earlier this year. And, as Mr. Ingraham noted in the House, Norwegian Cruise Line is considering buying the company now.

The prime minister told the House his government fully supports Baha Mar in its commitment to redevelop the Cable Beach strip.

“Yes, we are going to continue with the resolution in the Senate once it’s passed here. We will do all that we are supposed to do to put Baha Mar in the best position to proceed with finding another joint venture partner, or going back and talking to Harrah’s,” he said.

Referring to the resolution that would effect the transfer of government land to Baha Mar, the prime minister said, “No land will be transferred until the requirements that set out in the agreement have been satisfied. But Baha Mar is perfectly entitled to seek a new joint venture partner to meet the requirements of the agreement of 2005 and the supplemental agreement.”

“And we will give Baha Mar all the support that we can,” he added, “to permit them to seek to find a replacement joint venture. We will not seek to exercise any rights we may have (now) that they do not have a joint venture partner.”

He said the government would continue to treat Baha Mar as though it has a joint venture partner until the March 2009 deadline, by which time the company is expected to “deliver.”

The prime minister also sought to assure Harrah’s that it is welcome to invest in The Bahamas at any time.

Source: Bahama Journal