Members of the Bahamian delegation engaged in negotiations last week over the stalled Baha Mar project had two options in mind when they landed in Beijing. The first was to help broker an agreement between the embattled developer and his Chinese partners. The second was to file a winding up petition in the Bahamas Supreme Court in the event of failure to reach a deal.

In the government’s view, both of those options would lead to the same result — mobilizing the Cable Beach site and getting the mammoth project open.

Striking an agreement was the preferred option. Moving for the appointment of a provisional liquidator is viewed as the next best thing. At the end of those discussions last Wednesday, we are told one of the parties remarked, “Further meeting is a waste of time.”

The delegation, headed by Attorney General Allyson Maynard-Gibson, arrived in Beijing around 10 p.m. last Sunday.

On the first day of marathon talks — which started 9 a. m. Monday and ended 2 a.m. Tuesday — Baha Mar was represented by an agent out of Hong Kong.

Also present were the president of the Export-Import Bank of China, Baha Mar’s lender, and the chairman as well as the vice president of China State Construction Engineering Corporation (CSCEC).

Baha Mar’s general contractor, China Construction America (CCA), is a subsidiary of CSCEC.

On the second day of negotiations, Baha Mar President Tom Dunlap and Senior Vice President of Finance Vaughn Roberts negotiated on the developer’s behalf.

Baha Mar CEO Sarkis Izmirlian did not attend at any time.

The talks went from 9 a.m. Tuesday to 4 a. m. Wednesday. The parties were able to put a proposed agreement in writing, National Review understands.

In a nationally televised address last Thursday night, Prime Minister Perry Christie said “considerable progress” had been made.

National Review understands that the construction company agreed to a project completion date of October 31. But it set a condition: Baha Mar must pay it the $70 million owed for already completed work.

The parties agreed to penalties for late completion and they agreed to bonuses for early completion.

Izmirlian has asked for another $600 million to complete the project. In June, he reportedly said he needed $500 million.

In June, while he was busy preparing to file for chapter 11 bankruptcy protection, Christie was attempting to move the parties to final agreement.

Christie later reported that at the end of June, the only major outstanding financing issue was that Izmirlian would be required to provide a guarantee in respect to certain additional funding that EXIM Bank was willing in principle to advance.

Under the terms of the additional loan the bank would contribute 50 percent, with the remaining 50 percent being divided equally between the construction company and the developer, with each providing guarantees.

After planning his secret attack over the course of weeks, Izmirlian is now asking that all parties come to the table without any “hidden agendas”.

In his latest letter to “citizens” of the Baha Mar nation on Saturday, Izmirlian said, “I believe that if this is the case then a solution can and will be found.

“If parties are communicating in the background and planning other actions, it is impossible for all parties to reach a consensual position”.

Izmirlian’s funding requirements now include funding to meet start-up and operating expenses, funding to cover other liabilities and deferral of principal and the initial balloon payments under the loan facility with the bank.

Had the agreement been reached in Beijing, we understand it would have included the establishment of a special board to oversee the project completion. It would have had representatives from all sides.

The EXIM Bank is also insisting on an audit of cost overruns.

The bank has already provided most of the $2.4 billion financing it agreed to. According to Christie, the balance of the existing loan from the EXIM Bank is insufficient to settle the amounts owed to contractors and sub-contractors and to complete the project.

For the Chinese, Baha Mar is intended to be a showcase investment.

While Baha Mar has blamed its contractor for project delays, CCA has said Baha Mar’s decision to file for bankruptcy protection in the United States is “the direct result of its failure to secure adequate financing and its mismanagement of the design of the Baha Mar resort project”.

The prime minister has reported that the Beijing talks ended “without agreement”.

According to Christie, Baha Mar was not prepared to agree to terms which would have included the immediate discontinuance of its chapter 11 bankruptcy proceedings in the United States and its legal action against CCA in the United Kingdom.

Baha Mar fired back on Friday, claiming many statements of the prime minister are “just plain misleading”.

“Baha Mar has not refused to dismiss the chapter 11,” it said.

“We have agreed to dismiss the case as soon as the parties have a mutually-beneficial binding agreement to the benefit of all parties, an interest the government should share, rather than taking actions that risk irreparably damaging the discussions.”

Baha Mar was referring to the government’s move for the appointment of a provisional liquidator.

It is accusing the government of seeking to nationalize Baha Mar’s private assets.

This is hyperbolic and dangerous language, which truly impugns the reputation of The Bahamas.

A government nationalizing assets is not a good thing. Izmirian was clearly deliberate in his choice to make this claim, and he no doubt knows what the impact of such a claim could be globally.

Christie has stressed there is no truth to this claim. He noted that nationalizing private assets is something that is not only constitutionally unlawful, but completely contrary to the policies of successive governments of The Bahamas.

“That is most certainly not the purpose nor the effect of any order that might be made for provisional winding up of anything in The Bahamas,” Christie said.

Baha Mar continues to insist it is talking to its Chinese partners with a view to reaching an agreement.

The prime minister said Friday, in response to Baha Mar’s statement accusing him of being misleading, that the EXIM Bank has “expressed its disappointment to me today over Baha Mar’s lack of flexibility in this matter and their unwillingness to accept the sensible solutions offered to them in Beijing”.

The exchange between the government and Izmirlian over the last three weeks has been exhausting and overwhelming for many.

A growing mess

The Baha Mar crisis is the most significant challenge that has faced Christie’s prime ministership. For many months, it was clear to many that all was not well with Baha Mar. The first significant sign was the delayed opening last December. It was soon followed by rumors of shoddy workmanship and reports that the developer was running out of money, but the clearest signal that something was seriously wrong came in April when Izmirlian, speaking at the second annual Bahamas Chamber of Commerce and Employers Confederation Conclave, lashed out at both the government and CCA.

He was clearly frustrated and nearing a breaking point.

In the weeks since the bankruptcy filing — which left Christie and his ministers shell shocked — the Baha Mar debacle has deepened. The government has been left to strike a balance between providing the facts to the Bahamian people and avoid getting into a nasty public row with the country’s most significant developer since Sol Kerzner stepped onto the scene in the early 90s.

With the trust among the parties gone, many Bahamians watching from the sidelines have been left confused and dismayed. Many blame their government for the crisis. Many find it difficult to wade through the complex issues unfolding.

All parties involved continue to express a desire to reach the same outcome: to get Baha Mar completed and opened but in this calamitous episode, they have so far been unable to agree on a shared path to reach that goal.

Meanwhile, the country’s reputation continues to take a hit. Worrying too is the fate of more than 2,000 Bahamians employed by Baha Mar. They and their families are living in uncertainty. So are the many contractors owed money by Baha Mar. Added to all of this is the worry of a downgrade for The Bahamas by international credit ratings agencies.

The implications of such a downgrade and the impact of a protracted delayed opening for Baha Mar would be significant. The path the government has chosen as it seeks to resolve the crisis is the appointment of a provisional liquidator.

The prime minister has explained that the role of the liquidator will be to expedite the resolution of the matter and to prepare a plan for the restructuring of Baha Mar that will result in the earliest possible completion and opening of the project. Among other things, that liquidator would be empowered to make decisions on salary payments for the employees. For its part, Baha Mar has been promoting chapter 11 as the best route for a resolution.

In an op-ed last week, Baha Mar executive Robert “Sandy” Sands said chapter 11 provides a business with the time to put in place a sound financial structure and effective working relationships while the restructuring progresses in order to move forward successfully. It also protects the assets of the party for which the chapter 11 is being undertaken, he explained, but the government thinks it can obtain the same desired outcome through the Bahamian court system. The difference is that the court-appointed provisional liquidator will mean Izmirlian will lose control of Baha Mar. Chapter 11 would allow him to stay in control and to be protected from Baha Mar’s many creditors.

“The Bahamian court is familiar with using the provisional liquidation procedure as an effective tool to reorganize a company’s affairs,” Christie noted.

Today, the parties will be back in court — in The Bahamas and in Delaware.

Izmirlian said on Saturday he has written the prime minister asking for a cessation of the legal wrangling “in order to give all parties the necessary time to stay at the table, and continue to negotiate in earnest to achieve a compromise that enables Baha Mar to be completed properly and opened successfully as quickly as possible”.

This is interesting given that he is the one who threw the first legal stone. What he did not clarify is whether Baha Mar is willing to drop its various legal actions. If it is not prepared to, we could conclude that Izmirlian’s latest statement to his citizens is but another element of a tired game with potentially dangerous consequences.