By Anthony O. Miller
THE COUNCIL of Ministers yesterday called for new tenders to buy out the government’s 82 per cent holdings in the Hilton Hotel in Nicosia because the offer of Cyprus-based Louis Tours was unsatisfactory.
“The Council of Ministers has not accepted the (Louis) offer and has asked for new tenders,” Commerce Minister Nicos Rolandis said yesterday, after concluding the Cabinet’s last meeting before its August recess.
Rolandis had originally said he felt the government should get more than Louis’ £10 million offer for its stake in CTDC, and had wanted to renegotiate the offer.
Government sources, who requested anonymity, said Louis Tours had raised its bid to £11.5 million for the government’s 82 per cent of the Cyprus Tour Development Company (CTDC), which owns the Nicosia Hilton. The private sector owns the rest.
But the raised Louis offer fell short of the £13 to £15 million the sources said the government wanted for its shares in CTDC, so the Cabinet opted to seek new tenders.
The government is under pressure to sell 12 per cent of its 82 per cent CTDC holdings by September 1. Stock Exchange rules require it to reduce those holdings to 70 per cent of outstanding shares by then, so CTDC can stay listed on the Exchange.
At yesterday’s Cabinet meeting, ministers faced three options: accept Louis’ offer; reject it and seek new tenders; or simply issue new shares in the hotel in a public offering.
In seeking to raise the Louis bid, one source said, the government had argued that Louis’ offer “was equivalent to something like two-thirds of the net assets of the company.”
As well, while no legislation exists currently allowing casinos in Cyprus, the Hilton Hotel is a prime candidate for siting a casino, should such legislation ever pass, the source said, adding that Louis was well aware of this.
“After all, it’s a prestigious business. It gives access to one of the main hotel operators in the world,” the source said.
Louis’ bargaining chips included the fact the Hilton still has £14-£15 million in debts stemming from £16 million in renovation and reconstruction in 1992. Louis would have had to undertake this, the source said.
Then there is what one source termed the “lopsided” contract the government originally struck with Hilton International.
As well, had the Louis bid won, the travel giant would have had to make a similar purchase offer to the public holders of the remaining 18 per cent of the shares in CTDC, the source said.
Finally, Louis would also have had to plough some money into the hotel to make it viable.
“In other words,” a government source said, “whoever takes it will have to spend something like £20 to £22 million” to acquire the hotel and its debts, and get it up to snuff.
Securing other tenders should not be a problem, as “serious investors have contacted” the government about buying its shares in the Hilton, a government source said.
And those bidders already know that Louis’ £11.5 million bid was not satisfactory, so they will have a head start in the new tendering process.
A successful sale of the Hilton would realise Rolandis’ long-held aspiration to get the government out of the hotel business. The government’s other hotel, the shop-worn Philoxenia in Nicosia, has closed. The government is still weighing whether to accept one of two private tenders to operate the Philoxenia as a hotel.
The next Cabinet meeting is set for August 25 at the presidential retreat in the Troodos.
