Abraham Koomson, the Secretary General of the Ghana Federation of Labor, strongly opposed the proposed sale of SSNIT hotels.
He pointed to findings from the SSNIT Transaction Advisory report, which he said highlighted serious issues.
Mr. Koomson speaking on Ahotor FM’s morning show ‘Adekyee Mu Nsem’ with host Citizen Kofi Owusu believed that the government was exploiting divisions within organized labor for its own gain.
He emphasized that according to the SSNIT Transaction Advisory report, the Rock City Hotel (RCH) lacked sufficient funds to purchase the shares under discussion. This, he argued, disqualified the sale altogether.
“Why aren’t they making a profit? The SSNIT Transaction Advisory report clearly states that Rock City Hotel doesn’t have enough funds to buy the shares in question. The report rules out the sale,” Mr. Koomson explained.
He went on to elaborate that although the financial due diligence on RCH seemed acceptable overall, the report raised serious concerns about whether RCH had the financial capacity to handle a transaction of this magnitude.
Below is the Summary of the SSNIT Transaction Advisory Report:
1. Extended Payment Period: The General Secretary of GFL finds the proposed two-year payment plan unacceptable due to the prolonged uncertainty it would introduce, affecting SSNIT’s strategic objectives.
2. Unequal Bidding Terms: The terms allowing only RCH to spread payments over two years create an uneven playing field for other bidders.
3. Non-Aligned Objectives: The proposal does not align with SSNIT’s goal of selecting a strategic partner with the necessary expertise and financial strength to improve hotel operations. SSNIT seeks to limit its equity holdings, a requirement not addressed in the current proposal.
4. Lack of Immediate Full Payment: SSNIT prefers a cash transaction with immediate full payment for shares and management control, which the current proposal does not fulfill.
5. CAPEX Commitment: The proposed CAPEX funding plan, split 60/40 between RCH and SSNIT, may strain finances and add complexity.
6. Inadequate Financial Capacity: Financial due diligence shows that RCH lacks the financial capability to meet semi-annual payment requirements. Projected 2024 revenues are insufficient, and the company lacks necessary cash reserves.
Recommendations by the SSNIT Transaction Advisory Team:
1. Insist on Full Payment: SSNIT should require full upfront payment to minimize financial risk and ensure prompt transaction closure.
2. Fallback Option: If full payment is not feasible, SSNIT can offer RCH the option to purchase one lot with 100% payment upfront. A negotiation can be held for the second lot with a fixed expiry date for the option.
3. Bank Guarantee: RCH should provide a bank guarantee to assure SSNIT of its financial capability to complete the transaction.
4. Revised Term Sheet: SSNIT should provide a revised term sheet template supported by a bank, specifying required financial information and guarantee terms that RCH must fulfill.
BELOW IS THE FULL STATEMENT.
LISTEN TO ABRAHAM KOOMSON IN THE AUDIO BELOW:
Story by: Emmanuel Romeo Tetteh (#RomeoWrites) / Ahotoronline.com
