Issue link: https://maltatoday.uberflip.com/i/1380662
7 MATTHEW VELLA A difficult pandemic year that has cost International Hotel In- vestments – the owner and op- erator of the Corinthia hotels – just over €90 million in loss- es, has seen the Maltese hotels giant buy out the Zahra family from its 50% shareholding in the Golden Sands Hotel. The Zahras' Island Hotels Group had already been ac- quired by IHI for €50 million in 2017, which included the ownership of 50% in the Golden Sands resort, the Ħal-Ferħ land at Għajn Tuffieħa, and the Costa Coffee franchise. In its last annual report, IHI executive chairman Alfred Pisani – founder of the Corin- thia brand – said the company had to acquire the rest of the 50% when its partner went into liquidation, for the considera- tion of just €13 million. "Despite the unprecedented challenges, and in an effort to protect its interests, the compa- ny had to negotiate and acquire the other 50% of Golden Sands Resort, since our partner had gone into liquidation as it fell victim to the COVID-19 pan- demic. This move protected the interests of the company, its shareholders and its employees. Moreover, the price paid for this acquisition was a fraction of the price asked by our partners, a couple of years back." To minimise due diligence and limit the warranties demanded from the seller, a newly-formed BVI company, Bezemer Limited, was acquired to be transferred the 50% shares in Golden Sands Resort held by Zahra. IHI's Mal- tese subsidiary then acquired the entire Bezemer shareholding for €13 million. The acquisition does not in- clude the Azure Resorts Group timeshare operation, which was in process of being liquidated since 2019. The Ħal-Ferħ site and the Costa chain were al- ready acquired as part of IHI's acquisition of Island Hotels. Winston Zahra retired in Feb- ruary 2021, resigning his direc- torship at IHI after a lifetime in the hotels business. Pisani's bargain for the rest of the Golden Sands stake, does not hide the effect of the pan- demic on the international hotel group, which shut down as from March, and forced the suspen- sion of its capital spending pro- gramme. Year on year revenue de- creased by over €176 million, from €268m in 2019 to €91m in 2020, resulting in pre-tax losses of €90.3 million. Pisani said Corinthia's hotels group had "little or no business during the first two quarters of 2021". "This is all very painful but beyond our control. However, what is within our control is the discipline that we shall main- tain to ensure that all our hotel operations and other activi- ties control payroll costs whilst concurrently reducing all other operating costs. We expect that this discipline in maintaining maximum efficiency will, in fu- ture years, translate into addi- tional profits, which will cover the losses incurred last year and over the immediate term." Early on in the pandemic, IHI engaged with Bank of China, HSBC, Bank of Valletta, APS, Sberbank and others for capital repayment deferral schemes and the restatement of banking cov- enants. In Malta, IHI took full advantage of the state scheme to tap into a soft loan of €24.5m. Plans to sell its Prague hotel to a private investor for €158 mil- lion were abandoned when the investor had to withdraw from the agreed sale once the pan- demic struck. IHI said it was seeing green shoots of recovery with the re- sumption of its St Petersburg hotel, but also with a mid-May reopening of its London hotel, which represented 30% of its income in 2019 – equivalent in terms of revenue to all its Malta hotels. Corinthia is now in negoti- ations with the government over an "enhancement value" it will have to pay for the con- version of 9,000sq.m of the total 25,000sq.m land at Ħal-Ferħ, in- to residential use. The develop- ment will be a total 85,000sq.m enclosed compound with a 162-room hotel and 25 villas. The land was formerly part of the Island Hotels Group, when the Zahras were planning to turn the former Air Malta hol- iday complex into a timeshare resort. Pisani also said in the annual report that IHI is still exploring a second listing on an internation- al stock exchange and exploring new ways of raising capital. The company had aborted a second listing in the UK in 2008, following 18 months of discus- sions with Goldman Sachs, due to the financial meltdown of 2008. "This is not something that can happen overnight, and some 18 months of preparation are needed. In this context, I have instructed management to look afresh, at the opportune time, into the possibility of a second listing. We will also look at other ways of raising capital with the ultimate aim of ena- bling our company to grow and maximise shareholders' value," Pisani said. maltatoday | SUNDAY • 6 JUNE 2021 Hotels supremo: Corinthia boss Alfred Pisani (top) outside the Corinthia's London hotel, which accounts for one-third of the hotel chain's revenue. (Left) Island Hotels founder Winston Zahra sold off his 50% stake in the Golden Sands resort for €13 million earlier this year Corinthia snaps up Zahra's Golden Sands at fraction of original price NEWS Difficult year for Maltese hotels giant IHI plc, which registers €90 million in pre-tax losses in pandemic year Winston Zahra With his brother Tony Zahra, the pair set up Alpine Travel, and in 1979 opened the island's first aparthotel, the Riza. Win- ston Zahra then developed the Bugibba Holiday Complex, the Coastline at Salini, the Radisson SAS Bay Point at St George's Bay, and finally the Golden Sands at Ghajn Tuffieha in 2001. His long- time partner, the developer Naz- zareno Vassallo, was bought out of the Island Hotels Group in 2009 by buying a 25% stake of his share and putting the com- pany on the stock exchange. "The company had to negotiate and acquire the other 50% of Golden Sands Resort, since our partner had gone into liquidation as it fell victim to the COVID-19 pandemic"