Govt. getting no returns from $2.7 million resort investment
A $2.7 million investment in the Aggie Grey Beach Resort and Spa at Mulifanua by the Samoa Airport Authority (SAA) is not yielding any returns to the Government.
This was confirmed in a letter dated April 26, 2019 written by the Ministry of Public Enterprises Chief Executive Officer, Elita To’oala and addressed to the Ministers of Public Enterprises and Finance, Lautafi Selafi Purcell and Sili Epa Tuioti.
She advised the two Ministers that the SAA Board and management have been asked to assess the authority's investment in the resort and report back to Cabinet.
The correspondence was a cover letter of a "Performance Report for the Quarter Ending 31st December 2018" and also included an executive summary, key issue and recommendations for the two Ministers' consideration.
Under the executive summary section, Ms. To’oala wrote: "The purpose of this report is to provide an overview of Samoa Airport Authority's (SAA) performance for the quarter ending 31st December 2018. It includes an overview of performance, trends from past results, compliance with required guidelines, key issues as well as recommendations going forward."
She said the key issue is "the Authority's $2.7m investment to Aggie Grey's Beach Resort is not yielding any returns".
Therefore, as part of her recommendations, she said: "We advise the Board and Management to assess SAA's investment with Aggie Grey's Beach Resort and report to Cabinet no later than 24th May 2019."
Copies of the letter were sent to the Prime Minister, Minister of Works Transport and Infrastructure, the S.A.A. Board chairman and the S.A.A. General Manager.
The Minister of Works Transport and Infrastructure, Papali’i Niko Lee Hang, told the Samoa Observer in an interview that the authority is the fourth largest shareholder in the resort and the last time they were paid dividend was in 2012.
“The last dividend we received was in 2012 and if I recall correctly, they gave out $100,000 but 2013 onwards nothing. The Airport Authority is the number four investor with the hotel and the National Provident Fund is the major shareholder.
“The Airport (Authority) invested $2 million and then later on added $500,000 and we have not received any dividends and that tells a story,” he said.
The lack of dividend payment to this day is a concern, added Papali’i, as they need more funding for projects including an airport project currently underway.
“It’s a concern for the airport they need more money to fund their projects. There is another airport project underway and they need all the funding to complete these developments. It’s been seven years, without dividends…. sometimes they don’t have enough profits to distribute to the shareholders, and they keep it for their operations costs because it’s more important to keep the boat afloat otherwise it would sink."
The Minister said that is his view behind the resort's non-payment of dividends, though he said it is good to see the resort has not gone bankrupt.
“That’s my summation of what is happening, their cash flow is not sufficient enough to declare dividends but Aggie Grey Beach Resort and Spa is still in operation. The good thing about that, it is still floating.”
This newspaper contacted one of the resort's board members, Pepe Fruean, for a comment but he referred all questions to the C.E.O. of the National Provident Fund, Pauli Prince Suhren.
“The Samoa National Provident Fund C.E.O. is the interim Chair and Aggie Grey Beach Resort and Spa owners’ representative. Accordingly, I have copied Pauli as he is the appropriate person to respond to your enquiry,” he said.
As reported last week, the Samoa National Provident Fund (S.N.P.F.) has a 54 per cent stake in the resort, making them the largest shareholder. The S.N.P.F. had invested $34.2 million in the resort.
When this newspaper made queries about the S.N.P.F. investment and asked if there were any returns, Pauli did not divulge the information but indicated that the rate of return from all equity investments is 3 per cent.