Dear Editor,
I beg your indulgence and that of the newspaper reading public to respond to the letter by Mr Rawle Lucas in SN of Tuesday 2015-10-20 entitled, `Minimum selling price for two-thirds of the Marriott should have been US$30m not US$8m’.
I will concede that my earlier letter contradicting what Mr Lucas is portraying could have been more fulsome and explicit – but I didn’t think I needed to be. I thought and still do think that enough information has been put out from time to time. At the same time I do not think that my earlier letter was “without substance” or “a derogatory treatment of a serious matter” or “a smear campaign”. Rather, the very opposite, although I continue to hold that Mr Lucas is mistaken.
What I did and do still intend and hope for is to catch and hold the attention of all our fellow citizens, so as to have us all engaged in talking about and learning about the needed investments including the sourcing and the rewarding, for the growth and development of us the people and our country.
It had been suggested and accepted that an International Brand Name Hotel added to our existing mix of hotels would provide a desirable fillip to our hotel industry and a boost to our tourism sector. It was for NICIL to promote and lead such a venture. Inherent in every venture are acts of creation, of synthesis, all fraught with risks from conception through various embryonic stages to delivery. After a number of enquiries, consultations, desk-top trial and error analyses of various configurations, and a feasibility study it appeared that a hotel of about two hundred rooms, costing in total about US$60million, with a capital structure of about US$12 million in equity and about US$48million in loans/debt could be profitable and hence could attract the financing. NICIL duly registered the company, Atlantic Hotel Inc (AHI) and set out to and was successful in attracting potential partners who would be comfortable with each other. Appropriate commitments were exchanged between NICIL and the international hotel brand, Marriott, and also the potential investors in the debt and the equity.
NICIL proceeded to implement in accordance with its role as promoter/developer, advancing the project with its own funds. At various predetermined points along the project path, Marriott would be checking that the hotel was being built to their standards; and the providers of the equity and of the loan/debt financing would input their required amounts (tranches) of money. NICIL (not the Government) as developer holds all title to AHI, initially, and issues the relevant instruments, equity shares and/or loan certificates to the financers as their payments are made. Thus, the provider of the US$18million loan (to AHI not to NICIL) would have received his loan certificate of US$18million and the US$8million equity provider would have received two-thirds of the equity shares. All other share and loan certificates remain with NICIL until the relevant payments can and are duly made. Up to this time, no loss, nor discount, nor subsidy is evident.
Editor, in matters such as this the best of us can go astray because of the overlapping but non-identical meanings of words being used and in overlooking the distinct and separate identities of the various agencies involved. Thus, “two-thirds of the Marriott” (whatever that is) that Mr Lucas speaks about, is not the same as “two-thirds of the equity in AHI” for which US$8million was properly contributed. There is no problem, no loss, no discount, no subsidy, and no corruption.
Mr. Lucas’ statement totally ignores that planned equity is only US$12million. All of the remaining funds is debt (including the additional funds by NICIL), which has to be repaid by AHI. If the company, is dissolved tomorrow, the debt from Republic Bank and NICIL takes priority over the equity. AHI and NICIL have taken out full page advertisements on this very issue. As such, two-thirds of US$12million is US$8million; there is no US$30million to take account of. Mr. Lucas should also note that the opportunity to contribute the US$8million in the equity was widely advertised; it was not kept secret.
But Editor, the task we are all engaged in is the growth and development of people and country-not disputing. At times we should note differences and disputes but not get too bogged down in them – the passage of time often clarifies a number of things.
We of the PPP/C are pleased that all Guyanese and Guyana have progressed greatly during our years in office but as we think of attaining a per capita income like that of Trinidad or of Barbados or even more, like that of the USA, we must think of building an economy five to ten times what we have today. Anyone who would have been visiting the Pegasus over the last five years would approve of and laud its great rehabilitation and upgrading. Late last year or very early this year, after launching a seawall clean-up from the vicinity of the Bandstand I walked to the Kitty Pump House. Looking back from halfway along, perhaps the lighting was just right in the early morning hour; my heart filled with pride at the sight of the two hotels at the mouth of the Demerara; and the foreshore all along seemed longing for another eight or more such hotels so that someday one might think of Mobay or the Malecon.
There is very much for us to do and to learn as we do to continue the growth and development of people and country of the last twenty-three years of which we should all be proud.
Yours faithfully,
Samuel A Hinds
Former Prime Minister & President
