International Business

Baha Mar Ltd. files claim against Chinese construction company in London

Chinese workers are shown during Baha Mar construction in 2014.
Chinese workers are shown during Baha Mar construction in 2014. For the Miami Herald

It was supposed to be a win-win situation. The Export-Import Bank of China would finance the bulk of a long-delayed luxury resort complex on Nassau’s famed Cable Beach, thousands of Chinese workers would help build Baha Mar and the mega project would help revitalize tourism and provide thousands of jobs for Bahamians who would run it.

But the promising relationship has unraveled amid finger pointing over construction delays and missed opening dates. On Tuesday, Baha Mar Ltd., the developer of the Nassau resort, filed a claim in London against China State Construction Engineering Corp, the lead contractor on the project. China State is the parent of China Construction America, and it, in turn, is the parent of CCA (Bahamas) Ltd., the company working in the Bahamas.

The filing in the English High Court claims that China State Construction is liable for guarantee and performance obligations related to construction of the resort and that Baha Mar Ltd. is entitled to various financial remedies.

On Monday, Baha Mar announced that it was filing for voluntary Chapter 11 bankruptcy protection, saying its board had determined bankruptcy was the only alternative to getting the resort completed. The developer blamed China State Construction for the delays.

Chapter 11 requires suppliers and other creditors to continue working with Baha Mar as it tries to put in place a more solid financial structure, according to the company. Baha Mar is seeking debtor-in-possession financing of up to $80 million that would allow it to continue to pay salaries and benefits to workers and to pay suppliers and vendors for any post-petition claims.

Baha Mar is set along 3,000 feet of white sand beach that the Bahamian government has long sought to redevelop. It includes a casino, a Jack Nicklaus Signature Golf Course, four new hotels with 2,200 rooms, 700 refurbished rooms at the adjoining Melia hotel, a convention center, private residences and more than 40 restaurants, bars and clubs.

The resort complex originally was slated to open in December 2014, just in time for the winter season. The latest missed opening was on March 27. Baha Mar announced the delay on its Facebook page just a few days before the latest scheduled opening, provoking the wrath of guests who had booked rooms through the spring and summer.

The 1,000-acre resort had spent tens of millions of dollars on advertising its opening, including in the South Florida market. Some potential guests suggested on Facebook that the money would have been better spent completing the resort.

Baha Mar executives later said the Baha Mar Casino & Hotel and most amenities would be open in May and that all rooms at all hotels would be completed in late June. Both dates came and went.

On Monday, Michael Rubenstein, of Chicago, posted this on Baha Mar’s Facebook page: “I hope you guys over there can get it together. This is absurd. You tore up beautiful Cable Beach where I grew up going with promises that couldn't be kept from the start.”

Sarkis Izmirlian, chairman and chief executive of Baha Mar Ltd., said Monday that the company was keeping 2,000 workers that had been hired and trained for the opening on the payroll. But he suggested that if some type of consentual resolution with lender Export-Import Bank of China wasn’t reached in the next few weeks, the company would need to begin letting workers go.

In early 2011, the Export-Import Bank stepped in as a white knight, providing $2.4 billion in financing for the long-delayed project.

The Nassau Guardian reported that scores of Baha Mar employees packed up their belongings and were sent home Monday — although they were told they were still on the payroll. But one woman told the paper that she feared “my next paycheck will probably be my last.”

“The government continues to be available to all the parties to assist in the mediation and resolution of their differences,” said Bahamian Prime Minister Perry Christie in a statement Monday. He said the government “will not be taking anyone’s side” but would be available to mediate to protect the interests of Bahamian workers and the nation as a whole.

He declined to comment on the recent legal moves. The government’s hope, he said, is that “the Baha Mar resort will not only open soon but will fulfill its promise as an important new dimension in Bahamian and regional tourism and one that will represent a major contributor to Bahamian employment,”