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Baha Mar Bombshell Rocks the Bahamas

Baha Mar Bombshell and the reactions.
Submitted by: Young Bahamian
Mar 16 '08

This month the Bahamas was rocked with the news that the Baha Mar Resort on the Cable Beach Strip in Nassau may be dead!

Baha Mar Resort, Cable Beach Bahamas - artistic representation

Here is a complete rundown of the latest courtesy of http://news.bahamianyellowpages.com/

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.

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There are additional Comments from our Forums:

Good, great, wonderful !!
by Black Star

I really hope that the deal is dead. It was a bad deal all along and in the long run would continue the environmental degradation of Nassau, continue the over populated mess and cost us a big long hard stick up the ass financially. Hubert gave us a preview last week. Then Dr. Minnis backed it up. They knew that this was coming.

I think it is too huge for this island. Maybe we could take one or two more medium sized, up scaled resorts, but this mega resort stuff should be all done for this tiny rock. I do think though that there could be some resort development on Andros. North Andros is half a skip away from Nassau. They have the land, the natural resources. The Bahamas needs to stretch out. Get some a deese damn ppl. off diss lil rock. Expand to place a that can sustain development, create a new city. Do something different for God sake!!!
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Why Bahamar Deal Blew up
by Colleg Boy

More information is coming out about the comedy of errors that caused the bahamar project to, now appear to be blown up. I hope with all my might that some of it can be saved!

Four reasons why it appears to have failed:
1. International debt markets have frozen up. Due to the sub prime fiasco in the US it is now much harder for any real estate project to raise money by borrowing from banks or issuing bonds.
2. The FNM took too long they dragged their feet on this deal, playing politics with this deal and changing many of the terms that the plp had already agreed with bahamar on.
3. bahamar itself missed many deadlines with its partner. there was a jan 2007 deadline then a june 2007 deadline they missed. then the dec deadline was missed, so how is anyone to have confidence that construction would have began on time? so if construction didn't begin on time hubert said many of the land deals would not occur.
4. the bahamas tourism numbers are down. part due to international economics, but most due to the bahamas tourism product. bay street is still a mess, Cable Beach as it is is a bunch of run down resorts. except for the renovated hotel there and breezes. again i hope some brains get together and try salvage this mess!
Click to read more..

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