Builder mired in dispute with developers over finances, design of high-profile tropical resort complex
CCA Bahamas Ltd, a wholly owned subsidiary of China's largest construction company, said over the weekend that it is striving to restart work on the Baha Mar resort complex in the Bahamas, which is tied up in bankruptcy proceedings in the U.S.
CCA Bahamas said in a press release posted on its website Saturday that it is making "every effort to work constructively with the Bahamian government, China Exim Bank [Export-Import Bank of China] and Baha Mar Ltd [the developer] to reach a successful resolution" that will enable it complete the project.
CCA Bahamas said the project could be finished in time for the winter high season if a resolution was reached rapidly.
Baha Mar, a resort and casino project valued at more than $3.5 billion, is being built by China State Construction Engineering Corp (CSCEC) under contract with developers led by local businessman Sarkis Izmirlian, who filed for bankruptcy protection in the US on June 29, blaming "repeated delays" of the project by the Chinese side.
The project, which was started in 2011, missed two opening deadlines in December 2014 and March 27, 2015.
Equity capital accounts for too little of the total investment in the project, which is a major barrier to its smooth development and the cause of many disputes between the contractor and the developer, Jin Bo, executive president of the Tsinghua Real Estate CEO Chamber of Commerce, told the Global Times Sunday.
Generally speaking, owners of a project that is too highly leveraged (too many debts to equity), may find their say in making decisions restricted by creditors.
Primarily funded by a $2.5 billion loan from the Export-Import Bank of China, the project also got $150 million from CCA for a preferred equity stake and $850 million from the developer in equity.
On July 7, CCA Bahamas fired back, saying in a statement that Baha Mar Ltd's decision to file for bankruptcy protection was the result of the Nassau-based company's failure to secure sufficient financing and mismanagement of project design.
Baha Mar Ltd's bankruptcy filing in the US was "misplaced and calculated to benefit the project's developer over the interests of the Bahamas and its people," CCA Bahamas said in the statement.
CCA Bahamas has reportedly asked the US bankruptcy court in Delaware to dismiss Baha Mar Ltd's filing.
CCA Bahamas' motion is set to be heard on August 17, The Nassau Guardian newspaper reported on Thursday.
The developer could not be reached by press time, which was outside of normal business hours.
CCA Bahamas did not respond to a Global Times e-mail inquiry by press time.
"No matter what ruling the US court makes, the development of the project will mainly rely on the attitude of the Bahamas government," Song Ding, director of the tourism and real estate center of the Shenzhen-based China Development Institute, told the Global Times Sunday.
Song said that the nearly completed project will likely open soon, because the complex is regarded as crucial to the Bahamas' fragile economy.
A fully operational Baha Mar resort project, which includes four hotels with 2,300 rooms, an 18-hole golf course and a 100,000-square-foot casino, would provide about 5,000 new jobs and boost the Bahamas' GDP by about 12 percent, according to Baha Mar Ltd's bankruptcy filings.
The GDP in the Bahamas stood at $8.51 billion in 2014, up 0.93 percent year-on-year, data from the Bahamas statistics authorities showed.
Saying the completion of the project was a matter of "the utmost national importance," Bahamas Prime Minister Perry Christie in a speech on July 16 disclosed a plan to take control of the unfinished resort.
Subsequently, Ian Winder, a judge from the Supreme Court in the Bahamas, declined to recognize the US bankruptcy filing by Baha Mar Ltd, ruling that otherwise creditors would be unable to take action against the company, Reuters reported on Wednesday.
Jin took an upbeat view of the prospects of the project, saying the ongoing negotiations between the developer and contractor, under the pressure of the local government, would result in a solution.
But he expressed concern that the construction of the project would encounter some problems technically, as neither CSCEC nor the developer has any expertise in the construction and operation of big resorts.
CSCEC is best-known for its construction of government-related infrastructure and public works projects in China such as the national aquatics center, known as the Water Cube, which was used in the 2008 Olympics.
"The Baha Mar project is a significant opportunity for CSCEC to diversify its construction business into the overseas commercial real restate industry," said Song.
