PARADISE ISLAND, The Bahamas, November 17th, 2010 – Following the announcement by Prime Minister Hubert Ingraham regarding the Baha Mar project, Kerzner International stated that while it welcomed any efforts to enhance and improve the tourism sector in The Bahamas, the proposed terms of the Baha Mar project violate the Kerzner Heads of Agreement with The Bahamas and raise serious concerns, as the Prime Minister alluded to in his press conference. We intend to discuss with the Government how to address these concerns.
Sol Kerzner, Chairman and Chief Executive Officer of the Company, commented:
“When Kerzner first invested in The Bahamas by acquiring what is now the Coral and Beach Towers out of bankruptcy in May 1994, we made our investment on the basis of agreements with the Government that gave us contractual assurances regarding our investment. Although we were confident in our abilities to re-establish the Bahamian tourism industry at that time, we did so in the face of truly dire economic conditions. Accordingly, we insisted upon most favoured nation treatment, which would ensure that no subsequent investor would be given advantages that we never enjoyed.
“Since our first investment, we have always found Government – irrespective of the party in office – to be a faithful partner who has justified our initial and subsequent confidence in The Bahamas as an investor. We have invested more than $2.3 billion over the course of our build-out of the three phases of Atlantis, increasing our room count from approximately 1,100 in 1994 to over 4,000 today. We have grown the Bahamian workforce from approximately 1,200 employees when we commenced operations in 1994 to nearly 8,000 full-time employees today, not to mention the indirect employment that our investment has generated in the community. Furthermore, we have spent millions on training programs to develop and improve the skills and professionalism of our work force, which has allowed Atlantis to be rated among the top resorts in the world.
“When we made our largest single investment of approximately $1 billion for Phase III, we did so based on a Heads of Agreement signed with the PLP Government in 2003. Among the many requirements that Government imposed on Kerzner under this and prior agreements was a strict rule that at least 70% of the total construction labour force would be Bahamian. As was the case with the two previous agreements with Government, our 2003 agreement included a most favoured nation provision that assured Kerzner that our investments would be protected from subsequent investors receiving more favourable terms. These agreements represented a solemn promise by The Bahamas to us that any subsequent investor would only compete against us on a level playing field.
“Baha Mar proposes employing thousands of foreign Chinese workers, which would represent far more than 30% of the total labour force. Approval of this arrangement by Government would be a clear breach of an investment agreement with a developer that has become its largest private employer and an investor who took a risk on The Bahamas when its economy was struggling far more than it is today.
“In his press conference, the Prime Minister indicated that he was not necessarily in favour of building a single phase development of more than 3,000 rooms. I wholeheartedly agree. It is our contention that a first phase of no more than 1,000 rooms should be built and absorbed into the market successfully before undertaking any subsequent phase. Phasing in this manner would ensure a healthier, more stable tourism market and would protect the existing resorts and the Bahamian jobs within those resorts.”