The Social Security and National Insurance Trust (SSNIT) has justified its decision to let go of a 60% stake in six of its hotels.
At a media encounter on June 29, 2024, the Director-General of SSNIT, Kofi Bosompem Osafo-Maafo, re-echoed the long-held stance that the ultimate goal is to manage investment risks and improve investment returns of contributors, while explaining that the key to managing investment risks is the implementation of an asset allocation policy and undertaking investments in line with that policy.
He insisted that the SSNIT restructuring of non-performing companies is a priority.
“Apart from raising capital and finding experts to manage the hotels, the ultimate goal is to manage investment risks to improve investment returns”
“Key to managing investments risks is implementation of an asset allocation policy and undertaking investment in line with the policy”
Touching on the factors that have driven the decision to sell part of SSNIT’s shares in the hotels, the Osafo-Maafo pointed to consistent losses, frequent requests for maintenance funding, requirement of capital injections, and high capital expenditure.
Additionally, he noted that the organization identified the need for strategic partnerships to improve the performance of these hotel assets.
Mr. Osafo-Maafo further revealed that the performance of the six hotels was a major consideration in the decision-making process to offload the 60% shares. Referencing the performances of the hotels, he noted for instance that La Palm Royal Beach Hotel, which is one of the hotels to be offloaded, made losses in 11 out of the past 14 years and has not paid dividends in all its years of operation, with an average return on equity of -4.2% from 2012 to 2017.
In the case of Elmina Beach Resort, the entity made losses in 9 out of the past 14 years, has not paid dividends, and had an average return on equity of -4.8% from 2010 to 2017.
The story has not been different for the rest of the hotels. It was revealed that Busua Beach Resort made losses in 9 out of the past 14 years, has not paid dividends, and had an average return on equity of -31.7% from 2010 to 2017.
Records presented to the media showed that Ridge Royal Hotel made losses in all 8 years of operation, has not paid dividends, and had an average return on equity of -33.1% from 2016 to 2017, with a negative shareholders’ equity position.
However, Labadi Beach Hotel seems to be doing well as the records would show. It performed relatively better, making losses in only 2 out of the past 14 years and consistently paying dividends, with an average return on investment of 1.7% from 2012 to 2017, and 5.2% from 2012 to 2022.
SSNIT also refuted claims that it has shrouded the process of offloading its 60% shares in the hotels, aiming to give undue advantage to cronies. The Director- General maintained that the entire process has been transparent, to the extent that appointing a transaction advisor for the deal has to go through competitive bidding, hence the selection of SEM Capital as the firm to ensure value for money.
“SEM Capital’s bid was the lowest received. The highest bid was USD1,363,000made by KPMG. After a detailed Technical and Financial Evaluation of all the bids, SEM Capital emerged as the most competitive and was therefore selected as the Transaction Advisor”
Still on the subject of transparency, Mr. Osafo-Maafo said an advertisement was published in the Economist Magazine on 26th February, 2022 which attracted proposals from a total of nine (9) by the 23rd March, 2022 deadline.
Recommendations from The Entity Tender Committee (ETC) whittled the numbers down to 6 from which Rock City Hotel Limited emerged as the bidder which submitted “the best and strongest technical and financial proposal”.
“Consequently, Rock City started negotiation with SSNIT to buy a 60% stake in each of the four (4) hotels (Labadi Beach Hotel, La Palm Royal Beach Resort, Ridge Royal Hotel and Elmina Beach Resort)”
However, Mr. Osafo-Maafo has also revealed that “negotiation process has not yet been concluded”, a reason he urged the media and people who are interested in the sale of the 60% shares in these hotels, should do so cautiously.
By: Bright Yao Dzakah | Metrotvonline.com | Ghana
