Bahamas’ Baha Mar secures interim financing after filing for bankruptcy protection

baha mar

NASSAU, Bahamas, Friday July 3, 2015 – The bankrupt Chinese-built US$3.5 billion Baha Mar mega resort in the Bahamas secured up to US$30 million in interim financing this week, but it remained unclear when construction on the project would resume.

One of the largest commercial construction projects in the Western Hemisphere, the sprawling resort is eight to 12 weeks from completion once construction resumes, a lawyer for Baha Mar told a bankruptcy judge.

US Bankruptcy Judge Kevin Carey approved up to US$30 million in interim financing for the resort, which is described on its website as “the world’s glamourous new playground” and includes a Jack Nicklaus golf course, Las Vegas-style casino and 40 restaurants. More than 2,000 hotel rooms are set among its 20 acres of beach and pool facilities.

Sarkis Izmirlian, Baha Mar’s developer and the son of Armenian billionaire Dikran Izmirlian, has agreed to arrange the funding.

The interim financing is for the next 30 days to pay salaries, benefits and key suppliers, among others. It does not come with any construction timelines.

Meanwhile, major contractors on the troubled project are no longer on site. According to company spokeswoman Kellie Harris, ThyssenKrupp AG, which is supplying 66 elevators and eight escalators, has disabled all of the equipment for safety reasons and left the site.

A series of missed construction deadlines, faulty work, funding squabbles and lagging inspections at the resort have led to strained relations in recent months between the developer, a Chinese state-backed contractor, and China’s export finance bank.

The massive development has pointed the finger at its Chinese contractor, China Construction America, against which it has filed a claim in the English High Court.

According to chairman and CEO Izmirlian, the contractor failed to meet November and January deadlines, as well as the most recent opening date on March 27.

Forbes reported that the contractor, backed by the Chinese government, shipped in hundreds of Chinese workers to a region already suffering from high unemployment. Local contractors were reportedly paid late and two deaths were reported in construction.

Baha Mar filed for bankruptcy protection in a Delaware court on Monday. At Wednesday’s court hearing, lawyer Mark Shinderman said the project is 97 percent complete and could be finished in 12 weeks once construction resumes.

Once completed, Baha Mar is to add 5,000 jobs to the economy of the Bahamas, or 12 percent of the country’s gross domestic product, according to a Reuters report.

The Export-Import Bank of China financed most of the project with a US$2.45 billion loan, while Izmirlian’s group invested US$850 million in the resort.

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