Marriott owners reschedule debt

The Grand Bucharest Society of Hotel Companies, owner of the Bucharest-based Marriott Hotel will register $3-$4 million losses this year due to the loans it has to repay, corporate sources told Ziarul Financiar.
The company estimates to make some 800bn ROL (about $25 million) in turnover this year. Thirty-five percent of this amount (i.e. $8.75 million) account for the operating income, the sources said. Still, the financial losses caused the Grand balance sheet to keep in the red this year, whilst losses last year were somewhere in the neighbourhood of $11 million and turnover reached $21.5 million.
The Grand hotel complex required more than $150 million in investments, financed by an international banking consortium, with Austria-based Erste Bank as the lead-manager.
The company has recently rescheduled its debt, so that the maturity of the loan was increased from the initial 12 years to 20 years (until 2021). The loan was also secured by the Romanian State. “We’re on schedule with the interests and guarantee taxes and we have also managed to pay part of the principal,” the quoted officials said, explaining that the Finance Ministry had not made any guarantee payments so far.
The company officials estimate the company will start making profit as of the third year of the repayment period (2003), given that the amounts left to repay will gradually decrease.
The same sources said the main reason why the company had applied for rescheduling was the fact that the project began in 1991, while the market has changed a great deal since then. “Back in 1991, office space rental prices amounted to $45-$50/sqm, and now they reach $18-$20/sqm,” the Grand representatives say.
The shareholders of the Grand SRL joint venture are the Austria-based Bau Holding (51%), ONT Carpati (30%), Overseas Alliance (15%), and Grand Hotels Interests Ltd., UK (4%). The business is controlled by businessman Fathi Taher.