Govt pays N$100m for Swakop hotel
After TransNamib rejected Cabinet’s directive to sell its stake for a mere N$5 million, government has now decided to pay out the hotel’s foreign shareholder.
OGONE TLHAGE
WINDHOEK
Cabinet has approved a N$100 million purchase of the foreign-owned stake in Swakopmund Hotel and Entertainment Centre, after months of protracted negotiations.
The hotel is owned in equal halves by state-owned transport logistics and rail company TransNamib and international company Stocks and Stocks.
Earlier this year, TransNamib ignored a directive from Cabinet which sought to stop the rail agency from appealing a September 2020 court ruling that ordered the company to sell its 50% shares in the hotel to its partner for N$5 million.
While Stocks and Stocks accused TransNamib of failing to honour its financial obligations towards the business, the rail agency said its partner had not managed the business soundly, further claiming it had not received dividends since the establishment of the hotel 26 years ago.
Official correspondence between public enterprises minister Leon Jooste and TransNamib’s board chairperson, advocate Sigrid Tjijorokisa, shows that the minister went as far as lobbying Cabinet for support to block any appeal plans. This is despite the board being of the view that not appealing “is not in the best interest of the company”.
Elevate
After the board refused to bow to his directives, Jooste elevated the matter and managed to successfully lobby the Cabinet Committee on Overall Policy and Priorities (CCOPP) to intervene. The committee is chaired by President Hage Geingob.
“The CCOPP directs the minister of public enterprise to instruct TransNamib to abide to the High Court ruling and abandon the appeal to the court order in favour of Stocks and Stocks,” Jooste wrote in another letter to the board, dated 11 December 2020.
According to that letter, the CCOPP also authorised the minister to direct Stocks and Stocks to re-employ the hotel’s 178 employees as a matter of urgency and to settle outstanding salaries backdated from March 2020.
Compelling
The hotel is valued at N$350 million, but it has liabilities to the tune of N$111 million and an asset base totalling N$65 million.
With TransNamib refusing to lose its stake in the hotel for peanuts, government finally decided to acquire the hotel for N$100 million, a deal confirmed by Jooste yesterday.
According to the minister, the purchase price made it compelling for government to buy the hotel.
“The hotel was valued for around four times that amount a few years ago and we felt that it makes sense to secure this asset. The price was negotiated and is, in fact, lower than the value of the loan account of Legacy in the hotel,” he said.
The successful purchase also means government will now own the entire shareholding in the hotel through TransNamib.
“TransNamib will now be the 100% owner of the hotel and they will enter into a new agreement with Legacy, who will be responsible for the management of the hotel in a similar way as the arrangement of the Windhoek Country Club. If we did not do this, TransNamib would have lost their 50% shareholding for an amount of N$5 million,” Jooste said.
WINDHOEK
Cabinet has approved a N$100 million purchase of the foreign-owned stake in Swakopmund Hotel and Entertainment Centre, after months of protracted negotiations.
The hotel is owned in equal halves by state-owned transport logistics and rail company TransNamib and international company Stocks and Stocks.
Earlier this year, TransNamib ignored a directive from Cabinet which sought to stop the rail agency from appealing a September 2020 court ruling that ordered the company to sell its 50% shares in the hotel to its partner for N$5 million.
While Stocks and Stocks accused TransNamib of failing to honour its financial obligations towards the business, the rail agency said its partner had not managed the business soundly, further claiming it had not received dividends since the establishment of the hotel 26 years ago.
Official correspondence between public enterprises minister Leon Jooste and TransNamib’s board chairperson, advocate Sigrid Tjijorokisa, shows that the minister went as far as lobbying Cabinet for support to block any appeal plans. This is despite the board being of the view that not appealing “is not in the best interest of the company”.
Elevate
After the board refused to bow to his directives, Jooste elevated the matter and managed to successfully lobby the Cabinet Committee on Overall Policy and Priorities (CCOPP) to intervene. The committee is chaired by President Hage Geingob.
“The CCOPP directs the minister of public enterprise to instruct TransNamib to abide to the High Court ruling and abandon the appeal to the court order in favour of Stocks and Stocks,” Jooste wrote in another letter to the board, dated 11 December 2020.
According to that letter, the CCOPP also authorised the minister to direct Stocks and Stocks to re-employ the hotel’s 178 employees as a matter of urgency and to settle outstanding salaries backdated from March 2020.
Compelling
The hotel is valued at N$350 million, but it has liabilities to the tune of N$111 million and an asset base totalling N$65 million.
With TransNamib refusing to lose its stake in the hotel for peanuts, government finally decided to acquire the hotel for N$100 million, a deal confirmed by Jooste yesterday.
According to the minister, the purchase price made it compelling for government to buy the hotel.
“The hotel was valued for around four times that amount a few years ago and we felt that it makes sense to secure this asset. The price was negotiated and is, in fact, lower than the value of the loan account of Legacy in the hotel,” he said.
The successful purchase also means government will now own the entire shareholding in the hotel through TransNamib.
“TransNamib will now be the 100% owner of the hotel and they will enter into a new agreement with Legacy, who will be responsible for the management of the hotel in a similar way as the arrangement of the Windhoek Country Club. If we did not do this, TransNamib would have lost their 50% shareholding for an amount of N$5 million,” Jooste said.
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