Pegasus owner pursues US$8M Marriott equity
January 4, 2015 | By KNews | Filed Under News, Source - Kaieteur News Online
Prominent businessman/hotelier, Robert Badal, says he is willing to write a cheque that will see him gaining control of the US$57M Marriott Hotel facilities in Kingston.
AHI’s head,
Winston Brassington
According to the businessman who holds majority interests in Pegasus Hotel and Guyana Stockfeeds Limited, he has been following keenly the developments with Marriott and 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 percent ownership of the hotel.
“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,” the businessman said.
During the first three years of the hotel’s operation, AHI, which Winston Brassington heads, says that the equity investor will get US$1.3M. From year four of operation, the equity investor will be paid US$1.2M each year for the next six years.
In year 10 of its operation, that equity investor will have received a whopping US$37.2M, setting the rate of return over the 10-year period at 22.2 per cent.
Should Badal be successful as the equity investor, he is likely to rake in US$46M in returns by the end of 10 years, according to documents provided by Brassington and government.
Businessman,
Robert Badal
The new hotel is being granted 10-year exemption from Corporation, Property and Withholding Tax (including the payment of interest and dividends to debt providers and equity holders.)
Withholding Tax is income tax withheld from employees’ wages and paid directly to the government, by the employer.
It is also guaranteeing relief from duty and excise tax on capital repairs or replacements, including machinery, equipment and buildings costing more than US$10,000.
The equity investor is entitled to a one-off retrofitting of the project if so required, for a period of ten years from the commencement of commercial operations.
Badal’s Pegasus Hotel is located right next door to Marriott in Kingston. And it has no such concessions. Quite a few other hotels are also miffed over the extravagant incentives.
Under it financial arrangements for the Marriott, Government of Guyana has invested through equity and a loan, around US$20M. It is also sourcing another US$27M through a syndicated loan being managed by Republic Bank Trinidad.
The catchy part of the arrangement that has surprised many is that the additional US$8M that AHI’s head, Winston Brassington, says is needed, will virtually give control to the equity investor that is coming on board.
This hotel is being constructed under “public/private” financing arrangements.
Government last year announced that two Hong Kong businessmen had come on board with the US$8M as the equity investors but a court case over the mortgaging of the property saw the Hong Kong two pulling out.
The almost completed Marriott Hotel, in Kingston.
The two men are Victor How Chung Chan and Xu Han, whose company, British Virgin Islands (BVI)-registered ACE Square Investments Ltd, was touted to have invested the money.
The extravagant incentives and other benefits have left other hotel operators extremely worried as the new 197-room hotel in Kingston, when it comes on stream this year, is more than likely to close them down.
Last month, Brassington admitted that financing for the project was in jeopardy because of the court case filed by Opposition Member of Parliament, Desmond Trotman.
That case immediately raised questions of where government was getting the monies from to continue building the hotel.