Next to Cable Beach in Nassau loom the two enormous slabs of the Baha Mar resort–empty of guests but 97 per cent complete.
The developers filed for bankruptcy last Monday, and sued their Chinese construction company for US$192 million.
Baha Mar is huge. On a site of around four square kilometres will be 2,200 rooms, almost 300 private homes, a casino measuring more than two acres, and an 18-hole golf course. The cost? More than US$3.5 billion–over one-third of Bahamian GDP. The resort will employ 5,000-plus staff; one in 40 Bahamian workers.
Opening was set for December last year, then for March 27. The resort launched a glitzy marketing campaign, took on more than 2,000 workers, bought food and drink, and stashed US$4.5 million in banknotes for casino payouts.
Just three days before the planned opening, all was cancelled. The Internet exploded with angry postings from would-be guests. Baha Mar's luckless marketing team promised compensation. Construction ground acrimoniously to a halt. The IMF swiftly downgraded its Bahamian forecast.
Baha Mar's lead developer and chief executive is Sarkis Izmirlian, who lives in Nassau's ultra-exclusive Lyford Cay. His father made a fortune out of African peanuts. His grandfather fled the Turkish genocide in Armenia a century ago.
The stymied opening left Izmirlian with a monthly salary bill of US$7.5 million, plus a string of maintenance costs. Smaller Bahamian businesses were caught in crossfire. There's a million-dollar laundry bill, and another million due for groceries.
"Man, what a disaster. What an utter disaster," says Stephen Wrinkle, former president of the Bahamian Contractors' Association. He wants a Bahamian consortium to complete the unfinished Chinese work.
The lead contractor is China Construction America, a subsidiary of China State Construction Engineering. They and the main financier, the Export-Import Bank of China, firmly reject Baha Mar's complaints of poor management, missed deadlines and a failure to meet "standards of excellence."
China Construction meanwhile wants US$344 million for work done since February. Baha Mar says that's more than four times the amount due.
Izmirlian has applied in the US courts for Chapter 11 bankruptcy; in this variant, the original owner becomes a "debtor in possession." The business is supervised by the court, and protected from its creditors, but is able to borrow and develop a restructuring plan.
Last Wednesday, a court in Delaware agreed US$30 million borrowing to meet immediate costs.
That proposal had to be agreed also by a Bahamian court. At the request of the Bahamian government and the Chinese bankers, that court on Thursday adjourned the matter to Tuesday next week. The delay is "troubling," says Baha Mar.
The Bahamian attorney general Allison Maynard-Gibson says her government will pick up the salary tab. For a few days that may be sustainable, but not long-term. The Bahamas has struggled with unsustainable deficits, rising debt and credit downgrades.
Mega-resorts can work. The Atlantis resort on Paradise Island, just offshore from Nassau, is slightly larger than Baha Mar. Once on stream, these monsters can go through financial footwork almost unnoticed. In 2012, Atlantis painlessly changed hands in a debt restructuring. In 1989, in an earlier incarnation, the property went through a long-haul Chapter 11.
For the launch of a new resort, even a benign bankruptcy looks bad. Indeed, opening is the trickiest time–airline seats, marketing, staffing and last-stage construction need careful co-ordination. Opening a few thousand rooms at once compounds the risk.
The Bahamas has on many measures the most prosperous economy in Latin America and the Caribbean; but with tourism faltering for most of this century its performance has been "remarkably unimpressive," says former finance minister, Sir William Allen. One-sixth of the labour force is unemployed. It needs the boost from Baha Mar.
The prime minister, Perry Christie, has more than two years to play with. Last month, he was sunnily optimistic: "Good news is happening right now," he said. The Chinese had asked him "to make certain representations to Mr Izmirlian." He is now talking about "mediation." Staying friends with Izmirlian, the Chinese and his own voters will be a big ask.