Govt. seeking new bids of no less than US$85M for profitable Marriott Hotel

May 15, 2023 News

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…Guyanese businessman drops out of race

Kaieteur News – The Government of Guyana (GoG) has invited the six bidders vying for the acquisition of the profitable Marriott Hotel to make a new proposal but with a minimum bid price of US$85 million.

Given the new prerequisite, local businessman and owner of the Pegasus Hotel, Robert Badal, has pulled out of the race. Badal, was among the six who had submitted their proposal to the National Industrial and Commercial Investments Limited (NICIL) on April 17, 2023. He was also the second highest bidder with a bid of US$55.5 million, behind American businessman Ramy El-Batrawi, the owner of X, LLC with the highest bid of US$65 million.

According to the Chief Executive Officer (CEO) of NICIL, Radha Krishna Sharma, on May 2, 2023, the six bidders were contacted and advised by NICIL that their submitted bids have been rejected. Subsequently, the bidders were then invited to resubmit a new bid with a minimum bid price of US$85 million. He said too that the deadline for the submissions is on May 16, 2023.

When contacted, Mr. Badal explained that he has already submitted his best bid price for the hotel. As such, he noted he will not be inclined to proceed any further.

With Badal out of the race, it leaves the others: local consortium, Integrated Group Guyana Limited, headed by Ravindra Prashad with an initial proposal of US$55 million, Georgetown Investments and Management Services Inc. (Princess Hotel), General Manager, Mustafa Eray Kanmaz who had bid US$50 million, NCB Capital Markets Limited, a Jamaican Company headed by Steve Gooding with a bid of US$33 million and Muneshwers Limited, owned by Amarnauth Muneshwer with the lowest bid of US$25 million.

Several days after the six bidders submitted their proposals, Vice President Bharrat Jagdeo announced that the “bids are too low” and added that the government will not proceed with the sale of the hotel until the bid reflects the true value of the hotel.

The Vice President made the announcement during his party’s press conference, explaining that the government went to tender testing the market but, “none of the bids meet our price expectation, and we will not proceed with any of those bids.”

The Vice President assured that the hotel will continue to be owned by the government until an appropriate offer that mirrors the true value of the hotel is received. “We know what the true value will be in the current contexts. So that matter should be put to rest, that we will not proceed with any of the bids, because we believe that they are too low based on the value of that asset now and its capacity to earn,” Jagdeo continued.

The Marriott Hotel started, under the Jagdeo administration when he was President, using taxpayers’ dollars and with a syndicated loan through the Republic Bank Limited of Trinidad and had opened its doors on April 17, 2015. Under the syndicated loan agreement, the preferred rights goes to those investors – meaning that in the event of the hotel being unable to service the loan – the unknown investors would have the first lien on the proceeds of any sale.

Kaieteur News had highlighted that the hotel’s top bidder was barred by the United States Securities and Exchange Commission (SEC) back in 2010 from acting as an officer or director of a public company for a period of five years. It was reported that the US body had filed fraud charges in 2006 against Ramy El-Batrawi, and others arising out of US$130 million stock loan and manipulation scheme. Notably, while El-Batrawi never accepted wrongdoings, in April 2010 the final judgment resulted in him being barred from running a public company for five years. This publication had also highlighted that El-Batrawi visited Guyana twice last year, October 2022, and November 2022.  The American businessman had praised the time he spent with President Irfaan Ali during his visits to Guyana.

One month later, NICIL announced the Government’s decision to sell the hotel. In March 2023, Jagdeo revealed that despite the criticism the hotel faced when the construction was announced – the hotel has emerged as a profitable venture, but justified the sale of the hotel by stating that it was a business decision.

In fact, the VP said during a press conference that while the hotel is making a profit, it is of no supreme benefit to the Government owning it anymore.  Jagdeo continued by saying that within a few years several hotels are expected to come on stream and in order to avoid competition, this is the best time to maximise the profit and sell the hotel.

According to Jagdeo, the proceeds of the sale was supposed to be used, “to clear off the remaining loan and some of it will come back to the Treasury to be used back for whatever purpose is determined.”

Notably, a decision by the former administration has resulted in US$1.1 million ($226 million) of taxpayers’ dollars coming out every six months (since 2017) to service the US$27 million loan from the bank – for a 13-year period. This was after the hotel was unable to service the loan. In order to prevent the hotel from being acquired by the bank, the former Government in April 2017 made the decision to transfer the hotel’s financial obligations to the Central Government. However, VP Jagdeo stated that while in Opposition, the PPP administration was opposed to the hotel’s financial obligation being transferred.

 

 

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• According to the Chief Executive Officer (CEO) of NICIL, General Manager, Mustafa Eray Kanmaz, Radha Krishna Sharma, Vice President Bharrat Jagdeo

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