(Recasts to add details about $400 million financing needed to finish project)
By Tim McLaughlin
July 27 (Reuters) - A $400 million funding gap has emerged in the effort to finish a $3.5 billion mega-resort project in the Bahamas, according to a letter from the developer viewed by Reuters.
Sarkis Izmirlian, developer of the Baha Mar resort, outlined the shortfall in a July 23 letter to China’s Export-Import Bank, the main lender on the project. He proposed funding half of the shortfall, with the rest coming from China’s Export-Import Bank.
“We will lend $200 million alongside (China Export Import Bank) on a 50-50 basis into a new senior facility totaling $400 million that will fund the completion, opening and stabilization of Baha Mar,” Izmirlian wrote to Liu Lange, president of the Chinese bank.
Bahamas Prime Minister Perry Christie was copied on the letter. He has said the completion of Baha Mar is a matter of national importance. The fragile economy of the Bahamas is counting on the resort to provide 5,000 jobs and a 12 percent boost to its gross domestic product.
Construction of Baha Mar, which will feature a Las Vegas-style casino and more than 2,000 hotel rooms, has been stalled for months as the project missed a March deadline to open after running out of money. That forced Izmirlian’s Baha Mar Ltd to file for Chapter 11 bankruptcy protection on June 29 in a Delaware court.
Since then, Baha Mar Ltd and the project’s main contractor, China Construction America (CCA), have issued several dueling press releases blaming each other for the resort’s problems.
China Ex-Im Bank has financed much of the project with a $2.45 billion loan and CCA made a minority equity investment of $150 million, in addition to being the main contractor.
Izmirlian’s family has invested more than $900 million.
CCA is trying to block Izmirlian from reorganizing in U.S. bankruptcy court. The Bahamian government wants to assign liquidators, saying that process would be faster than moving through the U.S. bankruptcy process.
In his letter to the Chinese bank, Izmirlian expressed fear he would lose his hotel partners if the project goes through liquidation in the Bahamas.
“Appointing a liquidator at this point is likely to substantially negatively impact or lead to the extinguishment of those relationships, will lead to management upheaval, and will make it impossible to operate the resort in a short time frame even if completed,” Izmirlian wrote in the letter. (Reporting by Tim McLaughlin; Editing by Bernadette Baum)