Brassington denies Marriott is high risk venture

CHAIRMAN of Atlantic Hotel Inc. (AHI) and Executive Director of National Industrial and Commercial Investments Ltd. (NICIL), Mr. Winston Brassington yesterday maintained that the Marriott Hotel under construction in Georgetown is not a “high risk” venture.In a televised interview with Mr. Christopher ‘Kit’ Nascimento, he answered the many criticisms over the project declaring that it is a “good deal” for Guyana in terms of the creation of over 500 jobs and the boost to the

local hotel and tourism industry.
Brassington said:“Marriot is a great economic venture for the country…it will accelerate the hotel and tourism sector….it is an investment where pretty much all the money is going into a properly built hotel that is designed and built by Marriott, done to international standards that will be there for a long time.”
Asked about the cost involved, he noted that the numbers being peddled are inaccuracies that are unjustified.
“Our hotel is on the lower end of what the Marriott would cost,” he said.
The AHI Chairman added that the facts are plain as day, in particular as it relates to the cost, which was determined through international public tender.
According to him:“The price for what Guyana has is based on that tender….the tender process conformed to our laws.”
Brassington also expounded on the arrangements for the development and stressed that the process was undeniably public.
He said:“We did all of this in public…we answered questions in Parliament. We published our audited accounts. The information of our money going first was contained in the feasibility studies, of which the major parts, were made public last year.”
On the question of hidden costs, Brassington clarified that NICIL bore the $2M development and design expenses as well as the $2.7M for the rerouting of the sewage system in the city, However, he stated that the latter is an investment in infrastructure that is now owned by Guyana Water Incorporated (GWI) and an undertaking that would have had to be made at some point, irrespective of the Marriott development.

THE MISINFORMATION

He said the misinformation being circulated about the criteria being changed for the investor is simply that, misinformation.
The AHI Chairman said:”At that time (when the project was unveiled) we did not have the investor, but we had every confidence that it was only a matter of time before we secured the investor. We had the Government commitment to invest one-third in the project. We had the reasonable expectation that Republic Bank Limited (RBL) will secure the US$27M and we believed that with Marriott there it was only a matter of time to conclude arrangements with the private investor.
“Now we have published the accounts of AHI and it did show that we were putting the money up first, but that was the plan that our money goes first, followed by the private equity investor and then finally Republic’s (RBL) monies.”
He said the injection of RBL’s monies, following the said sequence, is expected to be made in July.
In May, AHI and RBL announced the completion of the financial arrangements by the latter for a syndicated borrowing of US$27M in debt financing for the former, towards the construction of the Marriott operated hotel and the shell of an Entertainment Complex.
Republic Bank, on behalf of its consortium of lenders, has received its approvals and the transaction is expected to be concluded shortly.
The principal investors in AHI (Marriott Hotel Guyana project and Entertainment Complex) are NICIL and British Virgin Island (BVI) registered, ACE Square Investments Ltd. ACE Square Investments Ltd. will acquire 67 per cent of the equity of AHI for US$8M. As required under the Hotel Management Agreement between Marriott and AHI, Marriott has consented to the transfer of the controlling interest of AHI from NICIL to ACE Square Investments Ltd.
Ace Square Management Ltd, affiliated company of ACE Square Investments Ltd., has been selected to operate the Entertainment Complex and secure the outfitting cost, estimated at a minimum of US$4M. Additionally, Ace Square Management Ltd will guarantee a minimum financial performance of the Entertainment Complex, consistent with the feasibility study conducted by HVS International (dated October 31, 2012).
Brassington explained that the delayed release of the name of the private investor in the Marriot project was due to a confidential conditionality agreed to by all parties.
He said:“Last September, at a press conference, we indicated that we had executed agreements for the investor, but we did not release the name of the investor, saying we had to wait on certain conditions to be fulfilled

WAS CONDITIONAL

“Essentially, the release of the name was conditional on the conformation of Republic Bank that they completed raising the US$27M and agreements of all the financing documents. It was a condition that we should not say who the investor was until this was confirmed.
“It is not unusual. An investor does not want to come into a project until they are satisfied that all of the financing for the project is secured. Otherwise, they will be coming into an incomplete project…it was unavoidable.
“…the other partners, Marriot and Republic Bank, had full knowledge of who the investor was and had conducted their due diligence.”
The AHI Chair also addressed the criticism that the criteria for the investor was relaxed from the previous stipulation that the investor has experience in the hotel industry and referred to the sequence of advertising that was done to attract an investor.
He continued:“Out of the 2009 process, we secured Marriott….by mid-2010 Marriott had announced to the world that they will be the operator for the hotel.
“Jumping forward, the investor we have selected and the terms and conditions under which we selected this investor was based on a public advertisement published 13 times between January and March of 2012…we already had Marriott there and already had the project started. The ad said we were simply looking for an investor to invest US$8M for 67per cent of the equity totaling US$12M.
“…one condition that was relevant that we need the investor to confirm that neither the investor, nor any of its affiliates, had any interest in a branded hotel company that operates in competition with the Marriott.

HOTEL EXPERIENCE
“…we said clearly that we are not looking for an investor with hotel experience, quite the opposite (of what was earlier asked for in 2009 before Marriott signed on to the project).”
According to him, a primary critic on this issue, President of Transparency International Guyana Inc., Mr.Anand Goolsarran has made unfortunate pronouncements.
Brassington charged: “Goolsarran’s comments are inaccurate. He seems to be unfamiliar with the sequence of activities to develop this project, the facts of this project.
“…for a man in his position, Mr. Goolsarran should know better. His statements are reckless and irresponsible.”
Additionally, AHI, in the latter part of May, announced the appointment, by Marriott International Inc., of Mr. Roberto Grisi as General Manager of the Guyana Marriott Hotel, in Georgetown.
Grisi assumed his position effective June 1 and the long-awaited Marriott project is progressing and on schedule for opening in the third quarter of this year.

(By Vanessa Narine)