Prime Minister Hubert Ingraham (Photo/Peter Ramsay)
Nassau, Bahamas – Harrah’s Entertainment indicated two days before Prime Minister Hubert Ingraham delivered his House communication on Baha Mar that it was considering walking away from its joint venture arrangement with the group, and that it would make a determination on the same within 48 hours of March 3.
Prime Minister Ingraham made this disclosure in parliament Monday, and tabled documents showing that one of Harrah’s issues with its joint venture agreement was delays in the transfer of lands for the development – a transfer the PLP government had nearly two years to effect but failed to do so.
“There has been a lot of hype about the Baha Mar Project. And expectations are high on the part of many. Knowing what I knew when I spoke last Wednesday (March 5), I sought to begin to dampen public expectations of a project whose commencement was likely to be delayed. In doing so, I chose to state an incontrovertible fact – I was not satisfied with the funding for the Project,” Mr. Ingraham said.
Pointing out that the FNM government had no indications of problems on the part of Harrah’s before March 3, 2008, Mr. Ingraham pledged the government’s support to Baha Mar in finding a replacement partner, and assured that the government stands ready to accommodate and facilitate Harrah’s should they still wish to invest in The Bahamas.
Mr. Ingraham further pointed out that as far the transfer of lands is concerned, it took the FNM government 5 weeks to debate and pass the Baha Mar resolution after the signing of its supplemental agreement with the developers, versus the period of April 2005 to May 2007 wherein the former administration failed to bring such a resolution to parliament.
THE PRIME MINISTER: Mr. Speaker,
Governments must tell the truth so that they can be trusted.
One of the issues raised by Harrah’s as they positioned themselves to terminate the Joint Venture with Baha Mar is the transfer of land for which we seek Parliamentary approval.
Had Members Opposite had done what they were supposed to do and come to Parliament with a Resolution authorising the transfer of portions of West Bay Street and the median strip to Baha Mar, Harrah’s would not have had this item to include as one of its reasons to terminate the Joint Venture. Instead members Opposite sought to structure the matter so as to avoid coming to Parliament on one section of the transfer and to postpone coming to Parliament until a date following the general election on the other. (See copies of letters).
Prior to the commencement of the debate on the Resolution to authorise transfer of certain lands owned by the Government to Baha Mar, I became aware of concerns by Harrah’s in connection with its intended joint venture arrangement to redevelop the Cable Beach strip into a world class resort and casino destination.
My Government, notwithstanding anything else, was at all times willing, ready and desirous of honouring the Agreement reached with Baha Mar with our predecessors in office.
It was at Baha Mar’s insistence, not the Government’s, that the agreement was reopened for negotiations.
We sought unsuccessfully to include Harrah’s in the negotiations and to make them a party to the Agreement. Upon our insistence, a senior representative of Harrah’s came to see me. I was led to believe that this was the first time an exchange had taken place between Harrah’s and the Prime Minister of The Bahamas.
Both Harrah’s and Baha Mar took the position that Baha Mar was the entity to re-negotiate with the Government and that Harrah’s would signify its acceptance of any agreed terms.
Harrah’s however was not prepared to have its parent company guarantee performance of the Agreement by its subsidiary. Instead, they would signify their acceptance of the terms of the Agreement between the Government and Baha Mar.
This they did. (See the agreement and letter dated 31 January, 2008)
While there was some question in our minds as to the position of the new owner’s of Harrah’s, the Equity Partners were led to believe that the Baha Mar/Harrah’s Joint Venture was a pre-existing arrangement which would be honoured.
We placed a lot of stock in my discussion with Harrah’s Vice-Chairman and in its letter.
On the day of the execution of the Supplemental Agreement Mr. Charles Atwood, the Vice- Chairman of the Board of Harrah’s, signalled his desire to speak with me via telephone. This we did.
In the conversation he expressed enthusiasm for the project.
The Supplemental Agreement contains time lines, the first of which is March 18th, 2008.
On that date senior management of Harrah’s and Starwood and Baha Mar were scheduled to come to Nassau for what was billed as a “major announcement and groundbreaking event for the project”.
The Office of the Prime Minister had been requested in early February to allocate time on my schedule for this event.
On Monday 3rd March, 2 days before the commencement of the debate on the Baha Mar Resolution, the Office of the Prime Minister was informed that the 18th March event would need to be re-scheduled.
That same Monday night I was informed that Harrah’s was reconsidering its involvement in the Project in light of “the prevailing financial climate” and that ‘the new owners of Harrah’s’ were considering walking away from the deal in The Bahamas” and that a decision was likely to be made within 48 hours.
The Associated Press reported on 7th March “tightening credit markets and a worsening economy are worrying some in the Atlantic City casino industry”.
It also reported that two weeks earlier, the Pinnacle Entertainment signalled the postponement, or even abandonment, of its $2 billion mega-casino on the site of the former Sands Casino Hotel in Atlantic City.
Yet investment continued to flow into that city’s casino properties and Harrah’s Entertainment CEO while admitting that “it’s a difficult time” joined last Thursday in a ribbon cutting ceremony for a new Harrah’s hotel project.
On the day before, the 6th March, Harrah’s signalled its decision to withdraw from the Baha Mar project in Cable Beach in a letter addressed to Baha Mar Joint Venture Holdings. I table a copy of that letter for the information of Honourable Members.
There has been a lot of hype about the Baha Mar Project. And expectations are high on the part of many.
Knowing what I knew when I spoke last Wednesday, I sought to begin to dampen public expectations of a project whose commencement was likely to be delayed.
In doing so, I chose to state an incontrovertible fact – I was not satisfied with the funding for the Project.
It must be understood that our concern over the challenge in financing the Baha Mar Project was not a concern over the financial soundness of the principals of the project – that is Mr. Dirk Izmirlian, a man I hold in high esteem. Indeed, I believe I met and had more interaction with him while in Opposition than did the Leader of the Opposition who negotiated with the son, Sarkis.
We believe the redevelopment of Cable Beach would be good for Bahamas’ tourism sector and good for the Bahamas economy.
We continue to support Baha Mar in its efforts to undertake the redevelopment of Cable Beach.
That support was recognized by Harrah’s as is indicated in the press release by that organization released today to the media. I read the text for the benefit of Honourable Members.
Until 8 PM on Monday night I was not aware of any difficulty Baha Mar was encountering with Harrah’s. We were not alerted in any way whatsoever other than a request from Baha Mar to reschedule the March 18th ground –breaking ceremony.
It was not until 10:20 PM that I was informed of Harrah’s indication that it would decide within 48 hours whether it would proceed with the project.
Prior to Monday past we had no reason to believe that the Resolution passed by the Parliament on Thursday past was one of Harrah’s issues.
In any event, the Resolution was passed by 1 PM and Harrah’s formally notified Baha Mar around 6 PM on the same day of its termination of the Agreement.
We were not aware that Harrah’s would or could claim that the time line on its Agreement had expired.
Finally, I express disappointment but not surprise at the turn of events.
And I repeat, we will support Baha Mar in its search and efforts to find a replacement partner.
And, I assure Harrah’s that should they still wish to invest in The Bahamas we stand ready to accommodate, facilitate and welcome them to our shores.