Jan 12, 2014 News
Work is continuing apace at the construction site for the Marriott Hotel in Kingston, Georgetown but it is unclear where the funding is coming from.
Kaieteur News has been attempting to make contact with the Chairman of Atlantic Hotels Inc (AHI) Winston Brassington, every day since January 2, to no avail.
Brassington at the end of last year had promised an update in the New Year but has since refused to answer any calls made to him from this publication.
Brassington last year had indicated that there would be financial closure with the Private Investor before the end of the year, this did not happen.
The monies to be sourced through Republic Bank are yet to be secured but the project is still continuing.
President Donald Ramotar, Finance Minister Dr. Ashni Singh and Brassington among other site but the private media houses were not invited.
A revised completion date of August was circulated to the media.
The company that prepared the feasibility study had set the completion date at the end of March this year.
Brassington also continues to remain ‘mum’ on the state of the negotiations with the private investor and has not publicly communicated any new timelines for the financial closure for US$39M still outstanding for the project.
Brassington is also yet to provide answers relating to the proposals submitted by private persons or companies to run the casino and restaurant that will be a part of the Marriott Hotel.
The Guyana Government is, to date, the sole investor in the Georgetown Marriott Hotel given that AHI is yet to have financial closure for US$39M of the US$58.5M required for its completion.
Brassington in September last, held a special media briefing on the project and told reporters that while the AHI would have executed a number of agreements with Republic Bank and the private investor, who he is still to name, there is no definitive financial closure for the money as yet.
He says that AHI is looking to have this aspect of the deal concluded by year end (2013), so that the hotel can be completed and opened this year.
“We haven’t closed but we have every confidence it will close soon,” said Brassington.
That unnamed private investor is scheduled to put in US$8M in the project and will have majority ownership of AHI.
That still to be named private investor will own 67 per cent shares in the company while government will own 33 per cent.
Equity for the project will be coming from the unnamed private investor in the sum of US$8M, as well as another US$4M to be invested by the National Industrial and Commercial Investment Limited (NICIL).
The remainder of the money will be in the form of debt/loans.
Republic Bank has been asked to solicit a total of US$31M, to be repaid at an interest rate of 8.9 per cent, while NICIL will be lending US$15.5M with zero per cent return.
According to a feasibility study undertaken for the project by a Miami based HVS Consulting and Valuation, the Senior Debt, solicited by Republic Bank will receive payment before the preferred equity, the NICIL equity, and the NICIL debt.
As it relates to the US$15.5M lent to the project by NICIL, this will be repaid, “when cash flows enable.”
Incidentally, five years after the hotel begins its operations it will take on an additional loan of US$5M.
Repayment of this loan will also take priority over the NICIL loan.
The unnamed private investor scheduled to put in US$8M, in the Georgetown Marriott Hotel is expected to rake in approximately US$46M by the end of 10 years.
This is documented in the extract of the feasibility report which was released to the media.
According to reports, during the first three years of the hotel’s operation, AHI will pay the still to be named private investor US$1.3M.
From year four of the hotel’s operation, the unnamed private investor will be paid US$1.2M each year for the next six years.
According to the report, in year 10 of its operation, that unnamed private investor will be paid a whopping US$37.2M, setting the rate of return over the 10 year period at 22.2 per cent.
The feasibility study done for the Marriott Hotel has included in its projections for the success of the Marriott Hotel, that “we have assumed” that a portion of the nation’s economic development initiatives are realized.”
The report says, “These include but are not limited to the cultivation of a portion of Guyana’s crude oil.”
This would mean that included in the factors that would make the Marriott feasible for the country is the need for Guyana to find oil.
This is yet to happen.
Included in the agreement signed, the Hotel will enjoy a 10 year waiver on corporate, property taxes which will commence from the first year of commercial operations.
The Marriott Hotel will also enjoy relief from import duty, VAT, excise tax, and any other import fees, taxes, duties on machinery, equipment, building and other materials, fixtures and fittings and furnishings and non-luxury vehicles required by the developers for the construction of the Project.
During operations, relief will be granted from duty and excise tax on capital repairs or replacements greater that US$10,000 in value within 10 years of operations.
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