NPTH rejects Jooste’s advice on hotel stake purchase

OGONE TLHAGE



WINDHOEK

Namibia Post and Telecommunications Holdings (NPTH) has rescinded its decision to purchase a 50% stake in the Swakopmund Hotel and Entertainment Centre, and will instead declare a dividend to government to allow it to make the purchase itself.

NPTH CEO Kristofin Itembu had in February sought the services of a consultant to conduct a due diligence to assess whether the purchase would make financial sense.

Namibian Sun has now been informed by sources that NPTH has opted out of the deal, despite earlier pressure from public enterprises minister Leon Jooste to buy the stake.

It is understood that NPTH does not want the controversial Swakopmund Hotel under its property base, even though it has the financial muscle to buy into it.

This publication can, however, confirm that NPTH will soon declare a N$135 million dividend to government, official documents have revealed.

“The board considered the proposal of purchasing the 50% shares of Legacy Hotels and resolved not to acquire some for various financial and economic reasons. The board, however, is aware and mindful of the financial predicament that TransNamib finds itself in,” NPTH board chairperson Sencia Kaizemi-Rukata wrote to Jooste earlier this month.

Unclear

The NPTH board has resolved that an estimated ordinary dividend of N$135 million for the financial year ended September 2020 will be declared to the State as ultimate shareholder.

Kaizemi-Rukata told Jooste government can then use the dividend for the share purchase.

At this stage, it is unclear whether the 50% shares to be procured is that which belongs to TransNamib, or whether it is Stocks and Stocks’ portion.

Meanwhile, a government official who spoke to this reporter indicated that dividends declared to government are not allocated to certain projects by default.

“That money will end up in the Treasury pool and depending on the pressing needs of the country, the funds might end up being used for something else. I believe that is why Jooste wanted to go the NPTH route,” the official, who chose not to be named, said.

Due diligence in progress

Jooste acknowledged that his ministry was looking at a due diligence on the potential purchase of Legacy Hotels stake, saying the purchase could prove to be a valuable asset for TransNamib in future.

“We are currently conducting a due diligence on the Swakopmund Hotel company before a final decision will be taken. The rationale for this is to secure a potentially valuable asset that has the ability to generate capital for TransNamib,” he said.

The hotel’s property value justified the potential purchase, Jooste said.

“Considering that the property had a market value of around N$500 million according to a 2016 market value valuation, we are of the opinion that our attempt to secure the property at a reasonable price - as opposed to us losing the property for a mere N$5 million - is in the best interest of TransNamib,” he said.

Jooste added that consultation had been sought with the TransNamib board and Cabinet after the High Court ruled that the rail agency must sell its 50% stake in the hotel for N$5 million.

TransNamib’s board defied Jooste’s directive not to appeal the decision when it filed its notice to appeal last month.