Samoa
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Government now holds 30% preference shares in Aggie Greys Hotel Limited

By Lance Polu

APIA SAMOA – 24 MAY 2023: The Samoan Government now holds 30% preference shares in the Aggie Greys Hotel Limited that owns the Sheraton Samoa and Aggies Greys Hotel Bungalows in Apia.

The shares worth is SAT$30 million tala of Aggie Greys Hotel Limited’s mortgage with the Development Bank of Samoa (DBS) on a loan that dates back to 1993 under the HRPP government.

In making the decision, Cabinet set out the following conditions:

  • To ensure compliance with legal and government policy requirements, to allow the DBS undertake this transfer and taking of preference shares on behalf of Government;
  • The submission of written commitments from the management and shareholders/investors of the Aggie Greys Hotel Limited to DBS, confirming the financing of repair and upgrade works to be conducted for the hotel for a period of 8-10 months, at the cost of SAT$42 million Tala.
  • That the Aggie Greys Hotel Limited submits audited financial accounts to the DBS before the end of April.
  • To include in the loan agreement a provision to allow government to sell its shares back to the management of Aggie Greys Hotels Ltd, within five (5) years, and after three (3) years of the grace period, at a set price, plus accrued dividends due at the time.
  • That the DBS continues to hold existing securities tied to the mortgage.

The Aggie Greys Hotel Limited loan from the Development Bank was funded by a credit line facility through the Central Bank of Samoa.

The Aggie Greys Hotel Limited loan is one of the projects listed under a Forensic Audit investigation. The arrangement of the credit line facility to the Development Bank of Samoa puts the spotlight on the Central Banks regulatory role.” However, when the hotel was sold to Chinese business interests, the hotel former owner’s debts with other banking institutions in Samoa were cleared but left the DBS loan unpaid.

Hit by major flood damages in 2018 and the tourism industry at a standstill with the Covid pandemic lockdowns, the new owners were stuck and learnt later that there had been efforts to liquidate the company and to buy back the hotel at a much lesser price.

SAT$42 million Tala Repair and upgrade works
With a premium facility and location in central Apia, the Government intervention considered the national interest in the light of major future events Samoa is hosting such as the Commonwealth Heads of Governments Meeting (CHOGM) in October 2024 and the ratification of the EU Samoa Agreement that expected guest numbers, will exhaust all major and premium accommodations in the country.

In the Cabinet decision, the current owners confirm the financing of repair and upgrade works to be conducted for the hotel for a period of 8-10 months, at the cost of SAT$42 million Tala.

But while $30million tala of the mortgage has been transferred as the government shares, there is still a balance of $22,608,507 tala. Cabinet has set the conditions of repayment of the mortgage balance of this amount as:

  • granting grace period of three (3) years beginning from January 2023-December 2025;
  • charging loan interest of 3% effective from January 2026;
  • monthly loan repayment of $220,000, effective from January 2026;
  • loan period of ten (10) years;
  • finalizing other related conditions including insurance for the hotel and assets;

Meanwhile, the amount owed in the Credit Line facility made available through the Central Bank to the DBS now stands at $37 million tala.

And Cabinet has directed:

  • The DBS to discuss with the Central Bank of Samoa, remedies to help with the repayment of the $37 million tala.
  • The DBS to discuss with the Ministry of Public Enterprises and the Ministry of Finance, its proposal for possible reclassification of its status as a Public Trading Body.
  • The appointment of the Chief Executive Officer of the DBS as a member of the Aggie Greys Hotel Ltd Management Board.

The DBS is also directed to submit to Cabinet progress reports on this task, every six months, commencing from April 2023.

The Aggie Greys Hotel Limited loan arrangements and payments is one of the projects listed under the Forensic Audit investigation. The arrangement of the credit line facility to the Development Bank of Samoa puts the spotlight on the Central Banks regulatory role.