THE Alliance For Change (AFC), in its haste Monday to condemn the construction of the Marriott-branded Five Star Hotel in Guyana, completely ignored the fact that 80 per cent of the money being spent to build the hotel comes from loans that must be repaid with interest over a 10-year period.

MALICIOUS
The AFC, in a strongly-worded statement Monday criticised concessions afforded to Atlantic Hotel Inc, the private company that owns Marriott Hotel.
According to an official close to the project, lambasting short-term tax breaks in isolation of the fact that 80 per cent of the US$58.5M being used to construct the hotel is loans, can only be seen as malicious.

It was explained that the financial structure for the project sees only US$12M being invested in equity to secure ownership, while the remaining US$46M comes in the form of loans that have to be repaid over a 10-year period.

Republic Bank (Trinidad) has been engaged to syndicate a US$27M loan, while National Industrial and Commercial Investment Limited (NICIL) has already loaned US$15.5M to the AHI.
SENIOR DEBT
Under the repayment arrangement, the syndicated loan through Republic Bank is listed as the Senior Debt, meaning that this money will be the first to be repaid at an interest rate of 8.6 per cent out of any revenues earned when the hotel opens its doors shortly.

The AFC in its tirade against the project states: “Hoteliers have contended that if Marriott Hotel wants to operate in Guyana it ought to invest its own money and operate on the same conditions as local hotels.”

The AHI official who spoke with this publication on condition of anonymity said that this statement by the AFC further exposes the AFC’s lack of understanding of the project, despite being provided with all of the necessary documentation.
The official reiterated that the property under construction in Kingston is owned by Atlantic Hotel Inc., a locally registered private company.
AHI has already publicly announced that ACE Square Investment has been engaged to be the majority shareholder with a US$8M stake in the hotel’s US$12M equity.

NICIL is the other shareholder, having invested the remaining US$4M equity.

Marriott, according to the official, has been engaged to brand and manage the hotel and will be paid a management fee, typical of the Marriott International’s operations around the world.
Debt servicing for the initial 10 years of the hotel’s operation is projected to stand upwards of US$5M annually.

According to the official, it can only be shortsightedness on the part of the AFC, to criticise tax waivers that were afforded to the project in order to increase its attractiveness and viability while completely ignoring the other financial intricacies and structure of the project.

The AFC in its public missive erroneously stated that tax dollars are being used to pay branding cost, electricity, security, and salaries.
UNTRUTHS

The AHI official said it appears that the AFC in crusade against the Marriott Project has now resorted to spewing outright untruths, especially since this a matter that has already been elucidated on, in no less a place than in the hallowed Chambers of Parliament Building by Finance Minister, Dr Ashni Singh.

The Finance Minister was asked to speak to the financing of the Marriott Hotel, the facts on the financing structure and whether any State funds had been spent and are committed to the project.

Dr Singh has already informed all Members of Parliament that no State funds from the Consolidated Fund have been allocated to this project or are expected to be allocated from the budget.

He had also debunked claims of any Government guarantee to any financial institution or Chinese company.

“There is no Government guarantee to any financial institution or Chinese company for this project…NICIL and the majority shareholder(s) will have to stand behind certain risks—costs overruns and any debt service shortfall until certain debt service ratios are achieve,” asserted Dr Singh.

The risks, he said, however are considered to be minimal given the feasibility studies, the deal structure and the form of the “FIDIC Plant and Design Build Contract.”

(By Gary Eleazar)