NICIL seeks to hoodwink nation over Marriott ownership

Jun 01, 2014 News

The National Industrial and Commercial Investments Limited (NICIL) has once again created some cloud regarding ownership of the Marriott Hotel under construction in Kingston, Georgetown.

The Marriott Hotel under construction in Kingston.

By way of a full page advertisement in the four daily newspapers yesterday, NICIL sought to suggest that a deliberate and irresponsible attempt has been made to give the public the impression that the Marriott Hotel investment and its control are being given away to the private investor.
According to NICIL nothing could be further from the truth.
The holding company went on to explain that the private investor will pay US$8M for 67 per cent equity in the company, Atlantic Hotel Incorporated (AHI). According to NICIL the total value of the equity is US$12M.
It went on to state that equity is the value of the shares of the company or the net value of the assets available to the shareholders.
NICIL went on to explain that the private investor is only entitled to 67 per cent of the net assets of AHI. It said that net asset is the total assets minus total liabilities. The total assets amount to US$58.5M.
The total liabilities according to NICIL is US$46.5M which consists of loan financing arranged by Republic Bank to the tune of US$27M, outfitting loan for the Entertainment Complex at US$4M and NICIL’s loan, US$15.5 M.
NICIL claims that the private investor, British Virgin Islands registered, Square Ace Investment Inc will only be entitled to ownership of the US$8M that it has invested but what the company did not say is that if and when the loans have been repaid, the private investors remains in control of 67 per cent of the entire project.
When the total loan stock is paid off, the private investor will be in control of 67 per cent of the total assets which will be the US$58M hotel with no debt, making that hotel the net asset of the company.
NICIL in the full page advertisement said that it is investing US$4M in shares in the company, AHI for a one-third shareholding, as against the investor’s US$8M. NICIL is lending the company, AHI, US$15.5M in debt which will be repaid in full.
What NICIL did not say is that the US$15.5 loan to the project is to be repaid at a 0 per cent interest rate and would be repaid only if cash flow enables.
According to NICIL, “It should not be lost that exactly this offer was publicly advertised on 12 separate occasions with sufficient details for any potential investor to know what was being offered.”
What it did not say is that the evaluation of the proposals made were shrouded in secrecy and that it had still been looking for an investor long after the project would have began construction using only NICIL’s money.
The NICIL advertisement yesterday also did not provide any details as to what informed the decision to choose to partner with ACE Square Investments Limited, a British Virgin Islands (BVI) registered company whose owners have no experience in the hotel industry as had been previously demanded.
Hong Kong businessmen, Victor How Chung Chan, and Xu Han have been identified as the shareholders of the companies.
According to AHI, Victor Chan has diverse and substantial investment interests both in Hong Kong and China.
“He is an Executive Director of the REXLOT Group and is the single largest shareholder and Founder and Director of the REX Resources Group.”
The REXLOT Group is said to be the leading lottery system and distribution company in China and has extensive operations in China’s lottery market, through its local subsidiaries and international joint ventures.
The REX Resources Group is principally engaged in gold, coal, rare earth and other metal, mining exploration and development, both in China and internationally.
Chan is also said to be the leading investor and shareholder of China Gamma Group.
Xu Han is reported to be a long-standing business associate of Chan and holds graduate degrees from prominent US and Hong Kong universities.
Additionally, Han has over 30 years of global experience in both the public and private sectors, such as finance, gaming, and mining.
Observers are now questioning on what basis the BVI registered company, owned by the two Chinese businessmen was chosen to invest US$8M.