Friday, 16th March, 2007
 

Baha Mar Development Company Ltd. (Baha Mar) entered into a Heads of Agreement with the Government of The Bahamas on the 6th April, 2005 with respect to a $1 Billion resort development in Cable Beach.  Baha Mar has subsequently announced that the project was being expanded to a $2 Billion development.  The company is seeking to have the already generous concessions granted by the Government under the 2005 Heads of Agreement vastly increased in addition to other requests which could also impact other property owners in the area and the flow of vehicular traffic.  The Government is cognizant of the importance of the Project to The Bahamas.  However, its duty to act in the best interests of the people of The Bahamas and to ensure that the rights of neighbouring land owners and relevant Environmental issues are properly addressed cannot be suppressed.  The Government has the obligation to balance the benefits of the Project with the best interests of the people of The Bahamas. In addition, the Government must have due regard to the level of concessions which could be justified in relation to other major developments.

The Government and its team of technical experts are vigorously pursuing negotiations with Baha Mar together with national and international expert advisors.  Particular attention has been given to the fulfillment of Baha Mar’s conditions precedents obligations under the existing Heads of Agreement relating to equity requirements, financing and the procurement of world-class casino and hotel joint venture partners.

Recently, the definitive agreement relating to these obligations was received by the Government. This document required very close scrutiny and analysis.  After months of good faith negotiations, with a view to facilitating the development, the Government on 7th March 2007 communicated its position on the concessions, approvals and other requests sought by Baha Mar, together with the Government’s response relating to Baha Mar’s Condition’s Precedents obligations.

Baha Mar has rejected significant parts of the Government’s position and is now asking that Government reconsider its position as communicated to Baha Mar.  In light of the same, the Government’s representatives indicated to Baha Mar some three weeks ago the necessity of securing an extension from its partners beyond the 15th March deadline in order to complete the transaction.  Such extensions are not unusual in major agreements of this nature.

Both parties have continued to dialogue with a view to resolving all outstanding issues. The Government remains fully committed to ensuring that the best possible arrangements are made in order to facilitate the Joint Venture between Harrah’s and Baha Mar and Starwood as its operating partner.

The Government remains optimistic that outstanding issues could be resolved with continued good faith negotiations within a timely manner.