Chow Tai Fook Enterprises Limited (CTFE) has announced that it is in the process of acquiring a resort being developed in the Caribbean archipelago of the Bahamas, according to a company press release. CTFE has ‘applied to the Government of The Bahamas for approval as a proposed investor and acquirer of the Baha Mar Resort’, notes the release, published through public relations agency PR Newswire, referring to a casino resort project under construction on the island of New Providence in the Bahamas.
CTFE will acquire ‘certain assets of the Baha Mar Resort’, through the acquisition of Perfect Luck Assets Limited (Perfect Luck), a special purpose vehicle (SPV).
Although not providing financial details on the acquisition, CTFE stated it would invest heavily in pre-opening activities ahead of the official deal completion, as well as employment drives, ‘which have already commenced and will be expanded in the coming weeks and months,’ reads the filing.
CTFE Chairman Henry Cheng Kar Shun stated in the release that the company is “looking forward to having Baha Mar join its portfolio of world-class integrated resort development projects”. Mr. Cheng also currently holds the non-executive directorship position of Macau gaming operator SJM Holdings Ltd.
CTFE manages businesses in hospitality, property development and retail, and owns Chow Tai Fook Jewellery, a part of Hong Kong-listed Chow Tai Fook Jewellery Group Ltd.
According to CTFE’s press release, the group has been involved in the Baha Mar project since 2011 through one of the company’s subsidiaries, Rosewood Hotel Group, and is in talks with the hotel brands previously involved, including Hyatt and SLS Hotels.
Stuck at the beach
With an initial projected cost of US$3.5 billion (MOP28 billion), the Baha Mar Resort was planned to include four casinos: the Baha Mar Casino & Hotel, Grand Hyatt, SLS LUX and Rosewood, offering amenities such as 2,200 rooms, 284 private residences and a 9,300 square meter casino.
The project’s original developer, Baha Mar Ltd, managed by developer Sarkis Izmirlian, invested nearly US$900 million, until the 2008 financial crisis led him to accept US$2.45 billion in construction loans from Export-Import Bank of China (China Exim/CEXIM), according to Bloomberg, and US$150 million from China State Construction Engineering Corp.
CEXIM however included in its provisions that Izmirlian, the developer, could never fire the Chinese construction group.
After numerous development problems and delays, in 2015, Baha Mar Ltd filed for Chapter 11 bankruptcy – permitting reorganisation – in a Delaware court in the U.S., claiming to be facing debts of US$2.7 billion. However the U.S. court dismissed the request and the Commonwealth of the Bahamas Supreme Court placed the project’s provisional liquidators in charge.
Construction of the development has been on hold since April of 2016, but Bahamas local magazine The Bahamas Investor reported in September that the Bahamas prime minister, Perry Christie, had stated that construction had resumed and that ‘every effort is being made to ensure’ the resort would open ‘before the end of the coming winter season’.
On October 25, BMD Holdings Ltd., a construction company also directed by Mr. Izmirlian, stated it had sent a letter to the Vice-President of CEXIM claiming it hadn’t received a response to his ‘superior proposal’ to buy The Baha Mar Resort and claiming the sale of Perfect Lucky to CTFC was an ‘entire fabrication’.
Then, in another press release on October 28, BMD Holdings Ltd. stated that ‘if indeed Chow Tai Fook Enterprises and CEXIM/Perfect Luck are in negotiations, then it can only serve the interests of the seller and the Bahamas to have a competitive process to achieve the best outcome. BMD stands fully prepared to engage with the seller to achieve such.’
However, in the meantime, it could take until 2018 for the property to begin contributing to the Bahamian economy, notes Standard & Poor’s, a contribution initially estimated to generate 12 per cent of the country’s Gross Domestic Product. * with Bloomberg
