AFC FINANCIER NOW SEES MERIT IN INVESTING IN SAME MARRIOTT HE EARLIER OPPOSED - OFFERS TO INVEST US$8M EQUITY
CHIEF Executive Officer (CEO) of the Pegasus Hotel, Robert Badal, has taken to the media to express an interest in the Georgetown Marriott Hotel’s 67 per cent equity, but never submitted a single formal proposal, despite the fact that invitations were published locally and internationally on numerous occasions over the years. Badal was quoted over the weekend in the Kaieteur News, publicly declaring an interest in the US$8M equity investment in the hotel.
This, however, is an about face on the US$58M flagship tourism project, given that he was once one of the more vociferous critics of the project and had predicted doom for the now nearly completed hotel, even before its sod turning ceremony in 2011.
In mid-2010, Badal was quoted in the very Kaieteur News as condemning the project, saying that it would inevitably kill the local hotel industry.
He contended then that Guyana has a relatively fixed hotel occupancy rate, which averages around 30 per cent nationwide – figures disputed by a Feasibility Study done for the Marriott by a Florida-based firm, HVS Consulting and Valuation.
Badal at the time had even argued that the hotel would not facilitate the creation of jobs locally, since there would only be a displacement of the personnel already in the hotel industry, when the facility comes into commercial operation.
The fact that Government last year allocated US$4M to begin construction of a Hospitality School, meant to effectively train Guyanese to man the industry, renders Badal’s argument at the time null and void.
WILLING TO INVEST
The Pegasus Hotel owner was reported in the Kaieteur News on Sunday last as saying, “now that details of the many incentives and tax breaks granted for the project are coming to light, he is more than willing to invest the US$8M that offers 67 per cent ownership of the hotel.”
The publication also quoted Badal as saying, “Once there is a guarantee that all these incentives, including the exemptions on the Withholding Tax, Property Tax and Corporation Tax, will come as the conditions under the current arrangements, I will be more than willing to come on board as the equity investor for US$8M.”
Badal’s utterances, however, have been described by observers as illustrating a disconnect from reality, despite the fact that he is in the hotel business, as the very incentives referred to, has been made available to potential investors and the public at large a long time now.
Several Calls for Expressions of Interest (EOI) to participate in AHI (Marriott Hotel Project) private equity were advertised over the years, many of which detailed aspects of the investment, but Badal never submitted a proposal.
In fact, an extract of the Feasibility Study detailing the financing structure and incentives, tax and otherwise, were publicly made available, but the Pegasus Hotel owner never expressed an interest.
Badal’s most recent pronouncement on the Marriott Hotel Project represents a stark departure from sentiments he would have also expressed in October 2013, and coincidentally published in the Kaieteur News, when he said that the hotel would not be able to recover its cost.
At the time, the Pegasus owner said, “Once operational, Guyana’s proposed flagship Marriott Hotel would be hard pressed to even cover its interest payments.”
NO LOCAL PROPOSALS
Only recently AHI was forced to correct a report in the Kaieteur News, over a similar assertion by a local investor who claimed to have expressed an interest in the equity shares in the hotel, but like Badal, never submitted a proposal.
At the time AHI had pointed out that since 2009, when the Hotel Project was first envisaged and before Marriott committed to the project, government advertised for partners to design and implement the project.
After Marriott announced their decision to operate the hotel in 2010, AHI published both internationally and locally, a series of advertisements, on 12 separate occasions, between January and March 2012 setting out the terms and conditions for an investor or investors calling for expressions of interest to participate in AHI’s Marriott Hotel Project private equity.
The advertisements were also placed with all of the Government’s Embassies and Consulates.
The advertisements invited bids for one or more participants to invest in 67 per cent of AHI’s equity in the Marriott Hotel Project for an amount of US$8M with the Government of Guyana, through NICIL, owning 33 per cent of AHI’s equity from an investment of US$4M.
Furthermore, the information contained in the advertisements was readily made available to the National Assembly by the Minister of Finance in a detailed response to questions submitted by the Opposition parties in March of 2012.
On that occasion, the Minister of Finance undertook to provide Parliament with a closed door presentation of the Feasibility Study, independently conducted in 2010 by HVS Consulting & Valuation. Major extracts were subsequently released to the media and have been widely published.
In May of last year, AHI and Republic Bank Limited, responsible for concluding the arrangement of the US$27M in debt financing for the Hotel Project, jointly announced the names of the investors.
IN PUBLIC DOMAIN
The opportunity, therefore, for a local investor or investors to participate in the ownership of equity in the Marriott Hotel Project has been in the public domain, in fact, since 2009 without the submission of a single serious proposal from a local investor.
“Nothing has changed since then. Atlantic Hotel Inc., until an agreement was entered into with the current investor, had not received a single serious, professionally documented proposal from any source, local or otherwise, in response to its advertisements,” the company has since stressed.
extracted from newguymedia.com
