Bailing in the Bahamas
When the Baha Mar project was announced more than two years ago, it was slated to be the most expensive development ever attempted in the Bahamas, more costly than even Kerzner International’s Atlantis.
The combination of the Starwood Group and its branded hotels—St. Regis, W, Sheraton and Westin—and Harrah’s Entertainment, which was going to build a Caesars branded casino resort, Baha Mar would transform Nassau’s Cable Beach to another must-see international destination. Harrah’s would have owned 43 percent of the project.
For the past year, experts questioned whether Harrah’s Entertainment would fulfill its part of the bargain after the company was bought by the private equity firms, Apollo Management and Texas Pacific Group.
The deal began unraveling last month when Bahamian Prime Minister Hubert Ingraham questioned whether the project would go forward in the Bahamas House of Assembly. Even though the House passed a measure that authorized the Ingraham administration to transfer land to Baha Mar needed for the projected, Ingraham would not commit to doing so.
“All it means is that Parliament is authorizing us to do so,” said Ingraham. “The land will only be transferred if and when Baha Mar honors the deal. And if the deal is not honored by March 2009, then there will be no deal.”
Baha Mar Resorts insisted it was committed to completing the project.
“If necessary, we will explore all options in partnership with the government of the Bahamas, to complete the project in a reasonable fashion that will benefit the people and the economy of the Bahamas,” the company said in a press release.
Harrah’s took the opportunity to unilaterally cancel its participation in the project, citing several extensions and unresolved disputes with Baha Mar.
“Unfortunately, it has taken Baha Mar Development Company longer to organize the project than anticipated and circumstances have changed such that it is simply not prudent to move forward,” Harrah’s said in a press release.
In a letter from Harrah’s President Charles “Chuck” Atwood to Baha Mar that the company released last month, he said extensions had been granted but because disagreements remained, the deal was cancelled.
Ingraham read the letter to the House of Assembly, and pointed out that, while he had no doubt that Harrah’s had the financial wherewithal to complete the project, it had made no promises.
“They have no legally binding commitment to the Bahamas,” the prime minister said. “All of their agreements are with Baha Mar.”
For its part, Harrah’s is not closing the door completely on its participation.
“Please be aware that if you are able to resolve these issues and continue with Baha Mar, we hope you will consider exploring alternatives by which a Caesars-branded casino and hotel might be included in the project,” wrote Atwood at the end of his letter to Baha Mar.