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Friday, November 18, 2005

Multi-Billion Dollar Real Estate Development Projects To Exit Bahrain

The Herman Group of Companies announced today that it may be forced to abandon three master planned real estate projects in Bahrain valued at more than $7billion after a series of announcements by officials in that country that call into question the transparency and reliability of doing business there. The Herman Group, a Texas-based real estate development firm, has been working with officials of Bahrain over the past year to launch and build Desert Kingdom, Coral Island and Race World, the themed commercial and residential development projects previously scheduled for groundbreaking in 2005.

Solicited personally by high ranking Bahraini government officials promoting the pending Bahrain-US Free Trade Agreement, including newly appointed Bahrain Ambassador Naser Belooshi, the projects were to be the first truly independent developments in Bahrain. Official of Bahrain also announced last January the launch of Desert Kingdom Bahrain by The Herman Group. Negotiations with Under Secretary for Financial Affairs, Abdulla Romaihi; Former Minister of Finance, Abdulla Saif; and Salah Asheer, General Manager, Premier Group SPC, were cut off abruptly after the release of proprietary information by The Herman Group of confidential financial and design documents demanded by the representatives for His Majesty the King, Shaikh Hamad bin Isa Al Khalifa. Recently, two of the projects were announced under ownership of Bahraini government officials and Middle East investment groups.

Prior to elevating the projects to the Royal Court of Bahrain, the Bahrain Economic Development Board (EDB), the official agency, entered into a Memorandum Of Understanding with The Herman Group and granted exclusivity of development encompassing certain components of the projects including major theme and water parks, spa resorts, golf courses and marinas.

"We are deeply disturbed," said Sherri Herman, CEO of The Herman Group. "Our company committed millions of dollars toward our work in Bahrain in anticipation of breaking ground in 2005 as requested of us by Bahraini officials. But recent developments have forced us to question the wisdom of any foreign investment in Bahrain and to seek remedies that are available to us as the original developer of these projects."

Recent announcements by Bahraini officials of development plans and investor base for the THGC projects essentially take Desert Kingdom, Coral Island and Race World from the Texas based company which is proving to be a possibly insurmountable obstacle.

"Desert Kingdom, Coral Island and Race World could and should have been the success stories that put Bahrain on the international investment map," Ms. Herman said. "Transparency issues, respect for signed contracts and the rule of law are not merely options for businesses and governments, they are absolute must-haves, and we have found that this is not the case in Bahrain."

Source: Press Release by Teddie Garrigan (Executive Vice President of Herman) at Zawya

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