Sources in BCC1 tell me that Blue City’s Al Madina A’Zarqa project has just been given assurances of 100% underwriting on the credit lines needed to complete the project by Bank of New York,
the appointed representative (Trustees) of the original Bond Holders. This is of course in some part because the bond holders are in pretty deep already, at ~40% of the investment cost sunk. So going ahead is the only chance of getting any money back.
There are also proposals to scale some of the project scope down, especially those communal bits they can't they can't sell like the Golf Course, and slowing down the development, but you're still talking a huge investment effort over the next few years.
I wonder if the money is - indirectly - effectively coming from the US Government's good ol' American taxpayers, at low rates of interest too, via the massive bail-outs over there? Wouldn't that be ironic headline for an incisive 'ViewPoint' piece for the Times of Oman - "Here comes the Cavalry!! Blue City project on track thanks to the Americans"...
Even better, it means the loans won't appear on the Government's books, and there will be some continued fiscal stimulus. Plus it will unlock significant Government spending on infrastructure.
Meanwhile, the boys at Blue City are being rewarded for hiring the big executive guns (mainly... American) at vast expense, and the party can continue for the management and the shareholders.
Worth a read... er, umm, sound familiar?
ReplyDeletehttp://www.huffingtonpost.com/arianna-huffington/will-the-madoff-debacle-f_b_151219.html
Bobindubai
Another $155m in revenue is needed to meet the next target of $186m by Nov 7. “We want to be on target by that date,” Mr Russell said. “In the summertime things slow down here, so we haven’t really been pushing new launches. Those are very much on track now. You’ll start to see some promotions.”
ReplyDeleteMaybe Mr Russell can state how much revenue they made, given that it's now December.
Indeed, Bank of New York Mellon (I believe is the proper name) received $3bln from the bailout. They are also the master custodians for the $700bln bailout fund.
ReplyDeleteBut does this actually mean that BNYM is getting a stake in the project or simply acts as a lender of last resort to the Omani government? The latter seems more likely, given the fundamental operating procedures of the institutions of American Empire: propose over-inflated development projects --> provide unlimited financing --> hold borrowers effectively subservient hostages as they can never repay the loans.
Looking forward to hearing from those that believed (and still believe) that the bailout was supposed to stimulate the economy.
So it goes back to the way the project was funded at the outset?
ReplyDeleteThis project will never be what it was advertised to be. I think eventually the blue city will end up being a far much smaller development than the Wave. But, i don't think the loan has anything to do with the Omani government, as it is not a shareholder in the project.
ReplyDeleteI believe the bailout was intended to cover (bridge) the banks finances so credit can flow again through the system, but banks never took that step after receiving the bailout money. Holding on to the money to protect themselves.
186m by Nov7??? why not if it is Nov 7, 2030. I think they are lucky if they have sold 10% of that figure by Nov 7
Whilst not wanting to get too hung up on words it would appear to me that given the calamitous churn on every and any aspect of this madcap venture that it is now basically in receivership.
ReplyDeleteWillie Dryer
Boxster's got a valid point. America got punk'd. It's all a daisy-chain. Take the bail-out players outta the ring and life would go on. As it is a rescue just might bring the whole show down. The BC venture is just part-and-parcel of it. What is 'it'? Its a disease called fucking greed.
ReplyDeletehttp://www.alternet.org/workplace/113758/did_america_get_punk%27d_on_the_bailout_/
Bobindubai
The main questions remain: how much has actually been sold to date, and how much can actually be sold in the coming months/years. The answer to both questions is very clear: by far not enough... No matter who wants to throw money at it, the project is simply not/never going to work.
ReplyDeleteIt seems that many of the past and current problems for Blue City are directly related to the Americans involved. Earlier on in the project it where those involved in ´arranging the funding´ and the contracts, later it was (is) the executive management, and through the entire process it has been the Bank of New York. Makes you wonder: how far would this project get without the Yanks...?
ReplyDeleteThe missing key-player has always been the Government of Oman. Of course they are involved in certain ways, but they have never taken serious control of the project. The involvement of certain American players has clearly not ´helped' the project at all, but in the end you can´t really blame these ´chancers´. If there is no control, people will abuse the system and take advantage. Maybe the project would not have taken off at all without the Americans. But then, maybe this would have been much better for Oman.
ReplyDeleteIt seems Mr. Russell is off to the US again to talk the Bank of NY Mellon about a dramatic downscaling and delay of the project (a simple tourist resort in stead of a new city). Don't think the governemnt of Oman is attending these discussions, so let's see how the Americans 'solve' this problem for Oman.
ReplyDeleteJust the appartments already sold in the intitial stages of the project, plus one or two hotels. That's indeed all BCC1 will do... IF they can find the money.
ReplyDelete