Marriott Feasibility Study under ‘lock and key’
… ‘show and tell’ session for Opposition could be arranged-Finance Minister
By Gary Eleazar
The factors that motivated primarily the Bharrat Jagdeo-led government to take a lead role in
the construction of a Georgetown Marriott Hotel, will continue to be under ‘lock and key’ as a result of “confidentiality” arrangements in place.
This is according to Minister of Finance, Dr Ashni Singh, who when asked about the Feasibility Study for the proposed multi-million-dollar venture suggested that a closed door session to edify the political opposition can be arranged.
Dr Singh in a recent missive to the House, had said, “There was market feasibility study conducted by the Marriott Hotel Group and one conducted in 2010 by an independent American firm which is being updated for 2012.”
Dr Singh did not name the independent American firm and also pointed to an Environmental Social Impact Assessment report, which he said is awaiting final issuance by the Environmental Protection Agency (EPA).
This, he said, is pending the receipt of building permission.
The Finance Minister did emphasise, “These documents are confidential at this time; however, the Government is willing to have a closed door presentation that will allow certain details of these documents to be made available under the condition of utmost confidentiality and discussed with key opposition members without these documents being made public.”
US$50M Financial Arrangement
Speaking to the financial arrange
ment in place for the construction of the Hotel, The Finance Minister said definitively that, “No State funds from the Consolidated Fund have been allocated to this project or are expected to be allocated from the budget.”
He spoke of equity participation to the tune of US$12M.
Of this US$12M, he said that US$8M will be sourced privately and US$4M will come from the Government-owned NICIL.
The Finance Minister at the time said that while various groups have expressed interest, to invest part of the US$8M investment, a selection of this investor has not been made.
These investors, he said, have to be approved by both Marriott and Republic Bank, given that the 67 per cent shareholder will be deemed to be the majority partner.
Speaking to Republic Bank’s involvement he pointed out that the bank will be responsible for “Senior debt” to the tune of US$27M.
Republic Bank was approached to prepare an investment-friendly package for private investors.
He spoke also of “Subordinate Loan Stocks of US$15M invested by the NICIL.”
He said that outfitting costs for the Entertainment Complex estimated at US$4M is expected to be funded by the operators (casino, nightclub, and restaurant) once selected.
He said that NICIL will then review periodically after completion of the project, the timing for the sale of its investments.
Dr Singh points out that “NICIL has spent or will spend less than US$2 M on development costs for the project including design costs to ADUA and preliminary costs prior to Financial Close; these costs are not part of the capital structure of Atlantic Hotel Inc (AHI).”
While expanding on there being no Government Guarantee “to any financial institution or Chinese Company for this project, he said that Government-owned NICIL and the majority shareholder(s) “will have to stand behind certain risks—cost overruns and any debt service shortfall until certain debt service ratios are achieved.”
He did say that these risks are considered to be minimal given the Feasibility Studies, the deal structure and the form of the “FIDIC Plant and Design Build Contract.”
The Finance Minister also declared that there was still more information which at this point cannot be made available publicly and pointed out that he was speaking to the management fees.
He said that this will be done by the Marriott Hotel group through one of its subsidiaries in accordance with standard Marriott rates per annum.
“The actual percentages cannot be disclosed due to confidentiality clauses contained in agreements,” said Dr Singh and reiterated that “Government is willing to have a closed door presentation that will allow certain details of these documents to be made available under the condition of utmost confidentiality and discussed with key opposition members without these documents being made public.”
Lease already in force
NICIL headed by Winston Brassington has already inked an Agreement with the Hotel owner, AHI, also headed by Brassington, to lease the seven acres of land belonging to NICIL at $25 000 per month.
For the purposes of that agreement which was recently made available after much public furor, the Holdings Company is represented by its Deputy Chief Executive officer/Company Secretary, Marcia Nadir-Sharma.
Nadir-Sharma is also the Company Secretary for AHI, headed by Brassington, and for the purposes of the agreement of lease, AHI was represented by Brassington.
In the agreement for the 6.8 acres of land which is located in the vicinity of the Pegasus Hotel Guyana and is considered beach front property, Brassington agrees that AHI will purchase the land from NICIL which Brassington also heads, “anytime after the commencement of the hotel operations of substantial completion of construction whichever is earlier.”
Today the Marriott is still to become a reality but the government has already plugged millions of dollars preparing for the project.