In a second round of bidding for the purchase of the state-owned Kingston hotel – the Guyana Marriott, American entrepreneur, Ramy El-Batrawi, founder of investment group X, LLC upped his bid by US$25 million from his initial offer.
He submitted a bid of US$90 million, the National Industrial & Commercial Investments Limited (NICIL) said following the opening of tenders yesterday. Integrated Group Guyana Inc, the other company that expressed interest in purchasing the hotel, submitted a tender of US$86.1 million – US$31.1 million above its previous offer.
The Government of Guyana had publicly rejected the first round of bids. It held the view that all six bids submitted for NICIL’s shares in Atlantic Hotel Incorporated (AHI) for the acquisition of the Guyana Marriott Hotel came in at a figure that was not acceptable. X, LLC in the previous round of bidding had tendered the highest bid at US$65 million while Integrated Management Group – which runs the Palm Court – bid US$55 million.
NICIL yesterday confirmed that on May 2, the six bidders were contacted and advised their submitted bids had been rejected. At that point, the six bidders were invited to resubmit new bids with a minimum bid price of no less than US$85 million. The deadline for submission was on May 16, 2023.
The public was not told of the request to bidders to submit new bids and no official announcement was made on the fate of the bids. In the invitation for new bids, NICIL provided a listing of assets, liabilities, and payables and explained what was expected in each category on the sale of the hotel. It listed cash on hand and at the bank as $4.6 billion. A subordinated loan was listed as $3 billion and deferred income at $3.2 billion. The related parties’ liability due to the parent company was $4.4 billion.
NICIL stated that cash on hand and at the bank will be used to settle working capital advances of $95.3 million due to the parent company of the hotel and an amount due to SCG International (Trinidad and Tobago Limited) of $261.1 million as construction costs. The cash and bank balance after the settlement of these liabilities will remain with the company for the benefit of the company after the sale and transfer of the shares.
The related parties liability due to the parent company, NICIL explained, will remain with the company for settlement by the company after the sale and transfer of shares. The subordinated loan will also be assumed by the parent company.
Subsequent to the opening of bids yesterday, NICIL said all bidders were invited to attend the bid opening at 14:00 hours on May 16, in NICIL’s boardroom. At the bid opening, representatives of one bidder was physically present, while a representative of the other company attended virtually via Zoom. R K Sharma, Arianne McLean, and Naresh Balkaran, the Manager of Internal Audit and Risk Management of NICIL, were present at the bid opening meeting.
The tender box was opened in the presence of all present and there were two bids. They were opened and read aloud in the presence of all present. The bidders and their respective bids were recorded, signed, and acknowledged by the bidders who were present, as well as the representatives of NICIL, the agency said.
The bids will now be evaluated and a determination will be made on the sale of the hotel.
Numerous questions were raised on April 27 when Vice President Bharrat Jagdeo announced at a press conference that the hotel will remain under the government’s control for now as it will not be moving ahead with its sale given that the highest bid to purchase the hotel was only US$65 million.
Jagdeo had said that they were only testing the market when they went to tender, stressing that they will keep control of the hotel until they are able to attract a bid which reflects the real value of the hotel and its capacity to earn.
“When we went out to tender we were testing the market… We believe in the government that none of the bids meet our price expectations and therefore we will not proceed with any of those bids,” the vice-president was quoted as saying.
Chief Executive Officer of NICIL, Sharma, in a statement issued following the opening of the April shareholders tenders, had named the bidders as Georgetown Investments and Management Services Inc (Mustafa Eray Kanmaz); X LLC (Ramy El- Batrawi); Muneshwers Limited (Amarnath Muneshwer); Integrated Group Guyana Inc (Ravindra Prashad); and NCB Capital Markets (Steve Gooding).
NCB Capital Markets of Jamaica, the wealth and asset management arm of the National Commercial Bank submitted a US$33 million bid while Integrated Management Group and Georgetown Investments and Management Services, which currently operates the Princess Hotel Casino, tendered bids amounting to US$55 million and US$50 million respectively. Muneshwers Limited tendered a bid of US$25 million.
Guyanese hotelier, Robert Badal who had tendered the second highest bid declined to submit a new tender for the purchase of the hotel.
Badal in an invited comment said he declined to compete in the second round of bidding as he had already offered the best price he could have.
“I have already offered the best price I could possibly have, given the information received. My offer of US$55.5 million reflects 15 times the current annual earnings which I believe is very attractive to any seller given that the valuations of large blue chip global companies on Wall Street range between 8 and 12 times earnings”. His comment was in response to Stabroek News following the report in the Sunday’s Stabroek that government holding company, NICIL had resumed accepting bids for the hotel.
He noted that even NCB Capital, an authority on valuing investments, thought that US$33 million was a fair price. NCB had tendered that bid in the earlier round of invitations for expressions of interest. Badal, the owner of the Pegasus hotels noted that the absence of a transparent process was also a concern for him. He said that no audited financial statements had been made available for the hotel.
X, LLC
According to the X LLC website, the group’s primary focus is to invest in and enhance target industries. El-Batrawi was described as a highly accomplished entrepreneur offering 35 years of experience in spearheading substantial business transactions, both nationally and on a global scale.
X, LLC was described as a pioneer in investment strategy innovatively combining consolidation and growth strategies. It said it adhered to a management centric investment philosophy in identifying and partnering with exceptional senior executives to acquire companies in fragmented and growing industries.
Last year, NICIL had issued a ‘Pre-qualification Notice’ seeking Expressions of Interest (EoI) from persons or companies, individually or as part of a joint venture/consortium, with an interest in purchasing its shares in AHI for the acquisition of the Guyana Marriott Hotel.
The closing date for EoIs was January 10, 2023 at 2:00 pm. Applications for pre-qualification were to include the following: financial capability in terms of net worth, audited financial statements for the last three financial years, net worth of a minimum of US$250 million, and a letter of financial capability from a recognised financial institution to acquire NICIL’s shares in AHI for the Guyana Marriott.
AHI was incorporated on September 10, 2009, as a special-purpose company to construct and manage the establishment.
Controversially built by taxpayers’ money and a loan, the hotel was opened on April 16, 2015, but was not able to service its loan. It was also reported that the hotel benefitted substantially from an accommodation deal struck with oil companies operating in Guyana.
