Hotel was secretly sold - GNCB

Hotel was secretly sold – GNCB

Dec 22, 2009 News

The management of the Guyana National Cooperative Bank has described statements made by businessman Wilfred Rambarran as absurd inaccuracies.

The Ocean View International Hotel

The bank was responding to Rambarran’s claims regarding the disputed sale of the Ocean View Hotel Ltd.
Rambarran is of the opinion that there are plans afoot to take the Ocean View International Hotel from him even after he has invested more than $160M in renovations and expended almost $100M in payments to acquire the establishment.
The investor had visited this newspaper recently and related what he described a tale of deception, vague correspondences and what he considers downright dishonesty that could make for a Hollywood blockbuster film.
Rambarran had entered into a sale agreement with the previous owner of the hotel George Lord to purchase the then struggling entity to the tune of $400M.
According to Rambarran, the hotel had creditors who reportedly agreed to write off any interest on principal payments owed.
There was an agreement to pay Lord an initial amount and $3M monthly after that and he would also make an initial payment to GNCB. That payment would be deducted from the sale price of $400M.
On January 2, 2008, an initial payment of $12M was made to Lord and another $10M to GNCB as payment on what was Rambarran’s understanding, part-payment of the $159M owed to that bank as was evidenced by documentation that was provided to him by the bank’s General Manager.
Rambarran said that a mere 15 days later, he received another correspondence from the General Manager that seemingly reneged on that agreement saying that the $159M offer was only an offer under consideration.
But according to the bank, the issue relates to the outstanding amount due on the hotel – the full and final payment was due over ten years ago, so the loan was in arrears for over ten years.
As per normal banking procedure, the GNCB holds a debenture that provides for the sale of the company’s assets for recoupment of the debt, and its debt-recovery agency could have sold the assets spoken of in the debenture at any given time.
But according to the GNCB, under the current management, the bank is not in the business of dispossessing people and companies, preferring instead to work along with its debtors, because settlement is one of the bank’s main planks for its debt-recovery programme.
General Manager Keith Burrowes said that over the past four years, management of the GNCB has been working with the proprietor of Ocean View Hotel, Mr. George Lord, in an effort to resolve his indebtedness without resorting to liquidating his properties.
Lord, Burrowes said, was given more time, with re-scheduled and restructured payment plans. He was also given advice on turnaround methodologies, and equity partners were even found to enter into business arrangements that could have restored viability to the Hotel.
Even though the entire amount was due and payable with immediacy, instead an interim payment arrangement was allowed by the GNCB.
Burrowes said that repayment was restructured in an effort to allow him an opportunity to re-invest in the building and turn around his business, thus improving profitability and empowering him to service his debts, which extended far beyond his indebtedness to GNCB.
This newspaper was told that Lord currently owes the Guyana Power and Light Inc., the Mayor and City Council, the Guyana Trinidad Mutual, National Insurance Scheme among others, and these debts are in the amount of hundreds of millions of dollars.
According to Burrowes, at all times, the management of GNCB acted in good faith with Mr. Lord in an attempt to resolve the indebtedness of his company, when any other financial institution would have long sold his assets to recoup its monies.
“In return Mr. Lord secretively entered into an Agreement of Sale on 2nd January 2008 with Mr.
Wilfred Rambarran to sell to him the property. This was legally, professionally and morally wrong. Mr. Rambarran was also complicit with this bad faith arrangement with Mr. Lord, and he knew the legal and financial consequences of entering into any acquisition arrangement with such a highly-indebted company.”
Burrowes said that the right thing for both parties to have done was to enter into a discussion with management of the bank, which had always proven extensively accommodating, with a view to arriving at a settlement before the formal signing of the Agreement of Sale.
“Management discovered this underhand move by Messrs. Rambarran and Lord by chance, and had to acquire a copy of the sale document, which provided for no mechanism for payments of extant debts, from the court files.
“This ignominious deal and the non-disclosure of information to debtors, which includes the lien-holding GNCB, could have propelled the bank into enforcing the debenture with immediate effect, because this bad faith movement by Mr. Lord had jeopardized the bank’s security and could have resulted in severe financial loss to the GNCB,” Burrowes explained.
Nevertheless, the bank extended its magnanimity even further and incorporated Mr. Rambarran into its engagements with Mr. Lord, he added.
The bank invited the two parties to engage in negotiations, with a view to resolving the situation in a way that would have made no-one and no entity a loser.
Burrowes said that co-operation and assistance was proffered, to the extent where management of the debt-recovery agency facilitated intercession by Go-Invest to receive concessions to enable expansion and a turnaround of the business into a viable entity.
However, while management of GNCB continued to act in good faith, offering concessional terms unfavourable to the best interests of the financial institution, information was leaked about alternative unilateral payment arrangements between Messrs. Lord and Rambarran.
But despite this, the GNCB waived its entitlement and did not sell the hotel, continuing to engage the two parties; because according to Burrowes, GNCB management always aspires to find resolution to problematic payment situations by working in partnership with all the protagonists, as in this instance.
Burrowes explained that the reason for the financial facility having gone into receivership on the May 29, 2009 was because Rambarran and Lord were not paying even the concessional terms that had been agreed to, notwithstanding several requests to prepare business plans to address the means by way of which the turnaround of the business could have been accomplished.
He said that in fairness to the shareholders of the GNCB, management had to protect the interests of the institution, because management of any financial institution cannot make unilateral decisions indefinitely on major issues without doubts being cast on his objectivity in a given issue.
Burrowes said that the GNCB had never entered into agreement with the company, nor the equity investor, to settle the indebtedness at $159M.
He also stated that upon the arrangement between GNCB and Mr. Rambarran with regards to a $400M settlement with conditions, he had agreed that, for the sake of transparency, and to facilitate payments to Mr. lord and the other debtors, the Debt-recovery agency would re-advertise the property and that, if a better price was obtained, all monies he had expended would be refunded to him.
“Even so the bank was reluctant to dispossess Mr. Rambarran, and management, after having an appraisal done on the value of the assets, which approximated $700M, was eventually, after discussions agreeable to a $400M offer from Mr. Rambarran, with certain conditionalities, one of which was that he addresses the indebtedness to the other agencies,” Burrowes said.
The GNCB General Manager stated that Rambarran reneged, and this precipitated the downward spiral of relations between him and GNCB, which is no longer prepared to extend further concessions after the writ had been issued.