Govt. will act on $50m in two months, says Minister of Finance
The forecast that the Minister of Finance, Sili Epa Tuioti, had made about two months ago in connection with the changeover of ownership of Aggie Grey’s Hotel on Beach Road, is somewhat disturbing.
He said that if repayments on the hotel were not up to date by January 2019, the Samoan Government would start seizing assets from the Aggie Grey family, to repay the $50 million loan the family had borrowed.
It is understood, that the reconstruction of Aggie Grey’s Hotel and its bungalows was necessary, since it had been demolished by Cyclone Evan in 2012.
This information was made available to the Samoa Observer by the Minister of Finance, Sili Epa Tuioti, when he was asked for comment.
Explained Sili: “Despite the fact that negotiations are underway with the new owners, if anything does not come through in the next two months, the Government will act.”
He did not explain what he meant.
However, earlier when the Samoa Observer, contacted the Chief Executive Officer of the Development Bank of Samoa (D.B.S), Fauena Susana Laulu, for a comment, she said transactions between the D.B.S. and Aggie Grey’s Hotel, who happened to be “our client, were confidential, and therefore they could not be disclosed.”
Later still, when Minister, Sili Epa Tuioti, responded to the questions raised by the Samoa Observer, he made it clear, that “the hotel had been sold last year, and the promises that had been made by the previous owners, were not fulfilled in their entirety.
The previous owners of Aggie Grey's Hotel, which at the time was rated 4.5 Stars, were according to M.C.I.L.’s business directory: Frederick Alan Grey, Alan Nicholas Links Grey, and Tanya Kathleen Grey.
The business directory also revealed that the Greys ceased their shares in the hotel, on 21 August 2017, and the new owners took over on the same date.
The new owners are Leornard Cheng, Wanying He, and Qing Tian of New Zealand, and Xuzheng Liu, who is from China.
Later, when the Samoa Observer contacted Qing Tian, by email for a comment on the issues that had been raised, by Samoa’s Minister of the Development Bank, Sili Epa Tuioti, he did not respond.
Later still, the Samoa Observer questioned Qing Tian, by email, regarding the freehold Lot 574 with 5648 square meters at Vaisigano, where the Hotel was located, asking if they had purchased the lot or just the Hotel, the email was also not responded to.
However, a document received by the Samoa Observer, outlining the freehold Lot 574 with 5648 square meters at Vaisigano, indicated that it remained under the ownership of Aggie Greys’ family.
This land had been used as collateral for mortgage #40929 to the Development Bank, with three other variations to the mortgage loans #41638; #44928; #46898.
During an interview on the status of the loans, Minister Sili Epa Tuioti, explained that only a portion of the payment that had been promised for quite a while, had come through.
Sili also said: “They did make a partial payment, and it’s my understanding that we are now still waiting, for the balance.
“However,” Sili explained, “the ongoing negotiations now are between the Development Bank and the new owners for them to take on the responsibility of repayments.”
Asked why the Government had not acted promptly, on seizing assets as they’d done with other debtors over the years, the Minister did not respond right away.
Later though, he explained, that it was always a problem “lending money on the promise, that the borrower will be able to provide the security, and that he will be able to pay the loan.
“And like other hotels, they have been struggling, and that way they were either overestimating the growth of occupancy of the hotel, and even if they were able to fill up the rooms, it still won’t generate enough to be able to maintain repayments, so that it is really a combination of many factors,” the Minister said.
He also said, that “the advice from the Development Bank was to make sure they’d paid what they’d promised several times for a little while now, and we’re going to work the current owners, to give them a month or two to work on their finances, and they will then be pay able to pay up.”
Said the Minister of Finance: “People are disappointed that the money that was paid by the new owners should have come to the Development Bank, and that is something that we are working on.
“There are many other assets involved in this loan and the Government will take whatever is needed to recover it.”
He also revealed: “The Hotel will be given two months and by January 2019; if nothing has been fruitful by that time, the Government will act in seizing assets.”
Around three weeks ago, a number of emails that had been sent to Lupesina Fred Grey on the matter, have not been answered at press time.
In June, a statement was issued by the Hotel saying that in four months, since the Chinese Investment Group had taken over ownership, it was struck again by flooding which forced them to close the place down.
Later, in a statement, the Investment Group, said: “As you are also aware, since we purchased the Hotel, we have been struck twice by severe flooding.
“The first flood was far more severe than the flood of 2012, and as a result we’ve invested close to 15 million Tala of our own funds, to clean up the damage that had been caused.”
In the end, “no debt was incurred,” but a direct Investment by the new owners of the Hotel, was made to repair the severe damages the hotel had suffered, in the two floods of February and April 2018.
“As new owners, we have had some bad luck with the weather in Samoa, but we remain optimistic in our investment, as well in the Samoan Government's efforts, in relation to tourism growth in Samoa.”