The government must "make its views known" in Kerzner International's restructuring, according to a former state minister of finance, with too many jobs and livelihoods at stake to just sit back and do nothing.
James Smith, the chairman of CFAL, said government officials should not directly intervene in the restructuring process. Instead, given the intimate market conditions, it needs to make some of its expectations and intentions known to protect Bahamian industry.
"Given the importance of the Kerzner property, in terms of employment, I think you would want to at least make your views known as to what should happen," he told Guardian Business. "In a small market like The Bahamas, everything is a monopoly. In a smaller country more intervention and oversight is needed from governments to ensure you are getting solutions that are appropriate. In this instance, you can't leave it to itself."
The statement from Smith comes shortly after a court filing by another lender in Kerzner International's $2.5 million mortgage debt that alleged a breach of contract and fiduciary duty by Brookfield Asset Management.
It was the second time Brookfield was sued by another Atlantis lender in recent months.
A spokesperson from Brookfield claims the court case "was dropped within a couple hours", although Guardian Business has so far been unable to confirm this statement.
With an election expected to be called within days, Smith added that the fate of the largest single private sector employer in the country must be properly addressed in the public forum.
"I think the government is caught in a dilemma," he continued, "in the sense that it has always put forward that it will leave the market to resolve its own issues."
The former state minister of finance said Brookfield "seems intent to keep the original deal", demonstrating the value of Paradise Island as an asset. The main concern, he explained, is how the property will be managed going forward. While it is in the country's interest to maintain it as a resort and tourism destination, this purpose may not match the long-term intentions of Kerzner's lenders.
"Sir Sol Kerzner was the embodiment of vision for Paradise Island," Smith told Guardian Business. "Everything revolved around him running the place. He connected with the local community. The new owners stepping in are essentially interested in real estate investment deals, not hotel operation. Can they bring to the table the skill set? The quick answer is no. I would be concerned about Atlantis as a future operation."
Last November, Sir Sol Kerzner, the chairman and CEO of Kerzner International, announced a transfer of ownership to Brookfield Asset Management. Under the debt-for-equity deal, Kerzner would have received a short-term management contract for Atlantis and a long-term agreement for The One&Only Ocean Club.
In January, the deal was derailed when Trilogy Portfolio Company, a group of lenders, filed legal action against Brookfield for orchestrating a "sweetheart deal". Later that month, the case was dropped when Brookfield withdrew the offer.
Since then, lenders returned to the bargaining table in an effort to reconcile the $2.5 billion in mortgage debt. Last Tuesday, ORIX Capital Market, another lender, filed its own legal action against Brookfield, alleging the Canadian firm was once again trying to push through essentially the same debt-for-equity swap after it "bought the cooperation" of other stakeholders.
The Bahamian government has yet to release a statement on these events.

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