Deal signed for $2bn Bahamas resort

Baha Mar
Resorts Ltd. has announced that it has signed a joint venture agreement with a subsidiary of
Harrah’s Entertainment to create and develop Baha Mar,
the Caribbean’s largest single-phase destination resort.The joint venture
partners have also signed management agreements with Starwood Hotels &
Resorts Worldwide. Establishing a new blueprint for
resort development, Baha Mar represents the largest, single hospitality
investment in the region and a one-of-a-kind destination resort experience
with a range of top-shelf accommodations, services and amenities, and
true-to-The Bahamas setting and design.
  According to the joint venture agreement, Baha Mar Resorts and a
subsidiary of Harrah’s Entertainment will jointly own the previously
announced Baha Mar—a mixed-use project to be located in Nassau, Bahamas
on a 1,000- acre site—making it the largest destination resort in the
Caribbean. Baha Mar represents a unique structure for the hospitality and
gaming industries and calls for a phase one investment of more than $2
billion. The joint venture will be 57% owned by Baha Mar Resorts Ltd. and
43% by a subsidiary of Harrah’s Entertainment and will become effective
upon confirmation by the Bahamian Government of certain required approvals
and concessions. The joint venture partners have also signed management and
related agreements, in which Starwood has committed to operate hotels under
its W, St. Regis, Westin and Sheraton brands at Baha Mar, and to invest $40
million in mezzanine bonds, subject to certain terms and conditions, to be
issued at the time of project financing (expected in 2008). Baha Mar
Resorts will serve as the developer for the resort.
  “The signing of these agreements marks the beginning of a new tourism
era for The Bahamas with the coming together of the most prestigious and
successful companies in lodging, gaming and leisure, most notably,
Harrah’s, our preferred gaming partner for this endeavor from the moment
the project was first conceived,” said Sarkis Izmirlian, chairman and chief
executive officer of Baha Mar Resorts Ltd. “With a shared vision and the
combined strength of each partner’s respective brands, together with what
we believe is the finest location in the Caribbean—Nassau, Bahamas, we
look forward to achieving our goal to create one of the world’s leading
resort destinations.”
  “Caesars Resort Hotel at Baha Mar is an important step in our global
development strategy as well as a true milestone,” said Gary W. Loveman,
chairman, chief executive officer and president of Harrah’s Entertainment.
“This one-of-a-kind, warm-weather destination resort will not only be a
wonderful addition to our current collection of properties worldwide, but
also give us entree into new markets, while providing our customers with a
place to enjoy the Caesars experience in a truly world-class setting in the
Caribbean’s most desirable destination.”
  “A development of this scale and scope aligns perfectly with Starwood’s
strategy to grow its brands in premier locations around the world,” said
Steven J. Heyer, chief executive officer, Starwood Hotels & Resorts
Worldwide, Inc. “This unprecedented project will offer travelers to the
Caribbean a destination and an experience unlike any other.”
  Baha Mar represents a quantum leap forward in the continued tourism
growth and success of The Bahamas, ushering in a new era for Nassau’s Cable
Beach area of New Providence Island. A recent study conducted by Global
Insight, one of the world’s leading companies for economic and financial
analysis and forecasting, revealed that upon completion of the resort, Baha
Mar is expected to directly and indirectly sustain over 7,000 jobs,
generate more than $4.7 billion in incremental tax revenues, and contribute
$11.2 billion to The Bahamas’ Gross Domestic Product over the next 20