Hotel Tower has enough pledges from investors to go public
|
Hotel Tower has enough pledges from investors to go public
Ram
Plans mini-shopping mallBy Miranda La Rose
Stabroek News
April 11, 2000
One year after Hotel Tower Limited (HTL) was declared bankrupt, the company's receiver-managership is now working steadfastly on immediate, medium and long term plans for the company to recapture the premium market share it once held in the local industry. HTL has also seen a reversal of its fortunes since.
Meanwhile, HTL has received sufficient pledges of support from various strategic investors, including the National Insurance Scheme (NIS), in the company's restructuring plan to make it a public company, receiver-manager Christopher Ram said.
On the eve of the first anniversary of the receiver-managership of HTL, Ram in an interview with the Stabroek News on Wednesday at the hotel spoke of the plans for HTL. HTL comprises the commercial hotel, Hotel Tower on Main Street and the nature resort Emerald towers at Madewini on the Linden/Soesdyke Highway.
The business was put into receivership after HTL declared its inability to repay Scotia Bank approximately US$2.14 million last year. The bank on April 12 then appointed Ram, managing partner of Ram and McRae Chartered Accountants as receiver-manager. The appointment was made under the provisions of three debentures HTL executed.
Since then, Ram said, HTL has jumped some of the hurdles which stood in its way. Its immediate plans include the construction of a mini-shopping mall to include a beauty salon, gift shop, offices for tour operators, a business centre, a travel agency, a boutique and jewellery store at the hotel. It is trying to establish a series of regular entertainment activities in the hotel too.
In the medium term HTL is pursuing the acquisition of the adjacent property to the north on a lease-purchase basis. This will be used to provide customer parking and to facilitate outdoor entertainment activities.
The long term plan is to become a full-service hotel of international class with a wide clientele, to be technologically advanced with highly motivated, well-paid and trained staff with facilities of international standard. Plans include a shopping centre, tennis court, car park and regular entertainment.
Speaking of the developments since the appointment of the receiver- managership, Ram said that 33 rooms in the Humphrey Wing have been spruced up and five in this section completely refurbished. Fifty-three rooms are currently being utilised and it is anticipated that all 78 rooms will be in use by the end of the year when current renovation works are completed. The remaining rooms are all in various stages of completion.
The hotel has four double-bedroom suites, two one-bedroom suites and 47 standard single occupancy rooms. Stabroek News found the rooms alluring and tastefully decorated, creating a feeling of homeliness.
A section of Hotel Tower with the swimming pool in the foreground, the Spectrum Restaurant and Bar at right and renovated rooms at left. (Photo courtesy of Hotel Tower) -------------------------------------------------------------------------------- There have been a number of positive comments coming from guests, which are encouraging to the staff. Rates range from US$75 to US$130 per night. The hotel has facilities for conferences and other functions, restaurants, bars, a gym and a swimming pool.
Some $21.5 million was spent on renovations at Hotel Tower while $4.5 million was laid out on bringing Emerald Towers back on stream. All funds used on the renovations were internally generated. "We have not borrowed a penny," Ram said.
When HTL was taken over last year there was no electricity; containers with building materials and furnishings had been lying on the wharves for some 2000 days; staff numbers were declining and all the expatriate and senior managers had left; there was huge indebtedness to bankers and suppliers; the resort had been closed; there was no money in the bank; and the elevator was inoperative.
Electricity was restored by the local power company and HTL has since signed an agreement with Guyana Power and Light Inc to keep bills current and pay $700,000 per month on the amount owing. Ram said that HTL has honoured every payment since and it is now close to paying off its deficit. The containers on the wharves were cleared after HTL lobbied for tax concessions from the government, facilitating the clearing of the three containers which had been on the wharves accumulating storage costs.
In relation to the declining staff numbers, Ram said that by the time HTL went into receivership, more than half of the staff complement had been laid off. From 160 employees the number had been reduced to 70. HTL has since employed 20 more permanent staff. Over the Christmas holidays 30 temporary staff had been taken on. Some members of staff who have worked with the company for the past five years and over told this newspaper that they are "keeping their fingers crossed" about the company's plans. Nevertheless, they are upbeat about recent progress. Emerald Towers which had been closed was reopened with a $4.5 million investment. The six cabins were refurbished and converted to self-contained cabins. The entire beach area was re-sanded and the drainage system was renovated with sluice boxes repaired or replaced. Washroom facilities were constructed on the beach. A portable septic tank was imported from Trinidad to facilitate this.
HTL's turnover since the receiver-managership from April 1999 to March 2000 amounted to $178.3 million compared to $150.7 million for the corresponding period the previous year. Room revenue for the period averaged $7 million per month compared to $5.6 million the previous month. Emerald Towers generated $5 million compared to $1.3 million for the corresponding period the previous year though it had not operated for the full year during both years.
Excluding the months of May and June during which occupancy was severely affected by the public sector strike the hotel saw a 35 per cent increase last year from the previous year. Room nights were 4,371 in 1998 and last year it was 5,915.
Speaking of the restructuring plan of the receiver-manager, Ram said that the Guyana Bank for Trade and Industry has approved a refinancing arrangement under which it takes over the indebtedness to the Bank of Nova Scotia.
The restructuring has the following elements: making the company a public company; carrying out a reorganisation and restructuring of the current balance sheet (preliminary estimates put a value of approximately $6.50 for the existing shares); and increasing share capital by $350 million to be issued in $5 shares.
This sum, Ram said, will bring new shareholders, mainly institutional investors, into majority holdings. "So far we have received sufficient pledges of support from various strategic investors including the NIS, which will facilitate the execution of the plan. As a condition to paying off the Bank of Nova Scotia, GBTI is requiring a commitment from institutional investors to take up $200 million of the issue, the balance coming from the public.
A brief historical outline of HTL shows that the then `Tower Hotel' began its operation in 1866 and moved to its present location on Main Street in 1910. In 1946, Tower Hotel was bought by the Humphrey family which controlled 65 per cent of the shares and 15 Guyanese shareholders the remaining 35 per cent. This included Banks DIH which has 8 per cent. The hotel was renamed Hotel Tower Limited. The company prospered for many years until 1969 when Pegasus Hotel, now Le Meridien, opened. The hotel lost significant market share.
