March 15, 2010--LEGAL battle lines are being drawn over the future of the Banyan Tree Desert Resort Bahrain.

Resort owner Al Areen Holding Company says it is seeking legal advice over the Banyan Tree Hotels and Resorts (BTHR) declaration that it may terminate its contract to run the property.

BTHR announced last week that it was taking legal action against Al Areen Holding Company, claiming that it is owed $1,122,000 (BD423,033) as part of a hotel management agreement signed last March and a settlement agreement reached in November.

It said that if it was successful in winding-up proceedings, the hotel management agreement would be terminated as a consequence.

But Al Areen Holding Company chief executive officer and owners' representative Tariq Al Jowder said BTHR could not break the agreement alone and that any change had to be agreed by both parties.

"We are discussing the situation with our legal adviser, but we are committed to the hotel management agreement," he said at a Press conference held at Al Areen Homes.

"The agreement is for 25 years, it was signed in 2005 before the completion of the resort.

"There are other means and names are available to us if this agreement doesn't work out."

Mr Al Jowder said earlier that the company had spent more than $200 million (BD75.6m) on the resort and would not tolerate anything that could compromise its high quality and level of service.

He said that BTHR had not delivered as per the hotel management agreement and his company reserved the right to take the appropriate and necessary action required.

"As Al Areen we have exerted extreme efforts in supporting the resort, we want to drive it forward," said Mr Al Jowder.

"We have increased maintenance because it was unacceptable before and have tried to increase occupancy.

"We expected that more people would be taking villas, but this has not happened. We knew it would be a difficult concept to market."

Mr Al Jowder said almost 60pc of the $2 billion (BD756m) Al Areen development's infrastructure had been completed and was expected to be finished by the end of the year.

He said the company was in advanced talks with developers with regards the medical centre and commercial shopping mall for Al Areen development.

Construction for the two projects was expected to start at the end of year or beginning of next year and hopefully it would coincide with an improved global economy, he said.

Mr Al Jowder said Bahrain Utilities 2 Company (BU2) was on schedule to deliver the district cooling facility and network to serve the development by the end of this year.

BU2 will provide chilled water to clusters one to eight in the northern and predominantly commercial zone at Al Areen.

The facility has been designed to provide 24,000 tonnes through centrifugal chillers, with an added capacity in thermal energy storage of 6,000 tonnes for a period of eight hours and deliver chilled water to an area of over 1m square metres, at the approximate cost of BD30m.

Mr Al Jowder said three primary substations would provide 66 kilowatts.

He said 70pc of the $22m (BD8.3m) worth of equipment coming from the Japanese company Sumitomo Corporation had been received and was up to the standard of the Electricity and Water Authority.

The civil work contract worth BD3m to BD4m will be awarded by the end of the month, he said. [email protected]

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