P.K Sarpong Writes: What Samuel Okudzeto Ablakwa does not want Ghanaians to know about SSNIT/ROCK CITY issue

P.K Sarpong Writes: What Samuel Okudzeto Ablakwa does not want Ghanaians to know about SSNIT/ROCK CITY issue

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In the face of the needless brouhaha surrounding the decision by SSNIT to offload some six hotels, certain facts are not out there to enlighten the Ghanaian public over the full story. This has come about because of NDC’s Samuel Okudzeto-Ablakwa who is out there misrepresenting facts, churning out outright lies and picking and choosing what to talk about for reasons we can describe as tendentious.

It is important, first of all, to establish the fact that the decision to dispose of these hotels by SSNIT was mooted in 2012. The Dr. Ernest Thompson-led administration assessed the situation and firmed up the decision to ‘get rid of’ of these non-profitable hotels.

SSNIT is not selling all its shares in the six hotels. It is rather offloading 60% of the hotels it wholly owned. SSNIT is restructuring all the non-performing entities it owns, and these include the six hotels. Ultimately, SSNIT seeks to raise capital to manage investment risks and to improve investment returns.

The six hotels have been draining SSNIT so much so that it has become necessary for a strategic partnership to be found. The reasons have been consistent losses by the hotels, frequent requests for maintenance funding, requirements for capital injections, etc.

The hotels under contention are La Palm Royal Beach Hotel, Elmina Beach Resort, Busua Beach Resort, Ridge Royal Hotel, Trust Lodge and the Labadi Beach Hotel. For most of these hotels, loans secured for their operations have never been serviced.

For the past 14 years, La Palm Royal Beach Hotel made losses for 11 years. It has never paid dividends in all its years of operation. Average return on equity is -4.2% (negative 4.2%).

In the case of Elmina Beach Resort, it has made losses in 9 years out of the 14 years it has been in operation. It has never paid dividends in all the years of operation. Average return on equity is -4.8% (negative 4.8%).

For Busua Beach Resort, it has made losses in 9 years for the 14 years of its operations. It has never paid any dividend in all its years of operation. The average return on equity is -31.7% (negative 31.7%).

Ridge Royal Hotel has made losses in all the 8 years it has been in operation. It has paid no dividends in all the years it has been in operation. The average return on equity for Ridge Royal Hotel is -33.1% (negative 33.1%).

Labadi Beach Hotel is the jewel in the pack. It made losses in 2 out of the 14 years it has been in operation. Labadi Beach has consistently paid dividends in all the years it has been in operation. However, the average return on investment was 1.7% (2012-2017) and has averaged 5.2% for the period 2012 and 2022. However, this is not enough for SSNIT to hold on to the facility. SSNIT wants to do away with all of them.

SSNIT caused a steering committee to be set up to drive the entire process. Members included all the board chairpersons of the hotels, 3 board members and some management staff of SSNIT. A competitive tendering process was prescribed. A Transaction Advisor was sought through publications in the Daily Graphic and Ghanaian Times as far back as 2018. The advertisement was also done in the international magazine, The Economist in its January 5-11, 2019, edition.

As of 16th January 2019 deadline, 15 firms had expressed interest in submitting bids. Six firms were shortlisted. An approval was sought from the Central Tender Review Committee for the selection of a Transaction Advisor on 12th December 2019 and same was granted on 24th December 2019.

Entities that submitted bids as transaction advisors were Deloitte and Touche, Standard Chartered Bank, PwC, EY Advisory Services, Cornerstone Capital Advisors, KPMG, SEM Capital Advisors, IC Securities Limited, Colliers International, etc. They were 15 in all. An evaluation committee recommended these 6 firms based upon their scores: EY Advisory Ltd, Colliers International, KPMG Ltd, PwC, Deloitte and Touche and SEM Capital Advisors. SEM Capital won the bid because its bid was the lowest amongst the pack.

SEM Capital led a consortium of 4 firms who brought legal, asset valuation and hotels expertise on board. The Transaction Advisor guided the selection of a strategic investor. Adverts were run for an expression of interest for a strategic investor to partner SSNIT in the Daily Graphic and Ghanaian Times. The Economist also published it on 26th February 2022.

Nine (9) companies responded to the advertisement and submitted proposals on 23rd March 2022 deadline. Six firms qualified after the evaluation processes. They were Rock City Hotel, Yaw Addo Development, Spartan-Ives, Temple Investments, Westridge Developers Ghana Ltd and Luxor Hotels Ltd. Mind you, not every entity bid for all the hotels. Some of them had only Rock City bidding. In all the hotels, Rock City’s bids were higher. Rock City’s bid was $29.4 million for Labadi Beach Hotel. Next to Rock City was Yaw Addo, $18 million. Luxor’s bid was $9.4 million. Rock City’s bid was $21 million for La Palm Royal Beach Hotel, Yaw Addo bid $13.2 million, Luxor had $5.9 million. Rock City topped all the entities in the other hotels.

Rock City’s bids for Labadi Beach Hotel and La Palm Royal was more than the combined bid of the other two bidders. It was also more than the recent price valuation for 60% of the hotels. Rock City’s bid for Ridge Royal Hotel and Elmina Beach Resort was the only bid received and it was more than the recent price of evaluation of 60% of the hotels.

Rock City is the biggest hotel in Ghana and the entire West African sub-region. The hotel in Kwahu has 1000 rooms and an additional 2000 under development. Rock City has the capacity to partner SSNIT in running these hotels effectively. As you can all see, due processes were followed for the transaction.

P. K. Sarpong, Whispers from the Corridors of the Thinking Place.

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