of
the
hotels
in
the
deal
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The
General
Secretary
of
the
Ghana
Federation
of
Labor,
Abraham
Koomson,
has
strongly
opposed
the
proposed
sale
of
SSNIT
hotels,
citing
findings
from
the
SSNIT
Transaction
Advisory
report.
According
to
him,
the
SSNIT
Transaction
Advisory
report
reveals
that
the
Rock
City
Hotel’s
(RCH)
funds
are
insufficient
to
purchase
the
shares
in
question,
thus
further
disqualifying
the
sale.
“So
why
are
they
not
making
profit?
If
you
read
the
SSNIT
Transaction
Advisory
report,
Rock
City
Hotel’s
funds
are
not
enough
to
purchase
the
shares
being
talked
about.
The
SSNIT
Transaction
Advisory
report
disqualifies
the
sale,”
Koomson
told
Nana
Yaa
Brefo
on
Onua
FM,
July
9.
He
explained
that
according
to
the
report,
while
the
financial
due
diligence
on
RCH
was
generally
satisfactory,
it
highlighted
significant
concerns
regarding
the
financial
capacity
of
RCH
given
the
transaction’s
size.
Koomson
The
current
proposal
does
not
demonstrate
the
financial
strength
to
meet
the
semi-annual
payments
of
$7.8
million,
as
RCH’s
projected
revenues
for
2024
fall
short
of
this
requirement.
Therefore,
RCH
has
not
met
the
financial
due
diligence
requirements
to
undertake
the
deal
in
its
current
form.
Koomson’s
statements
come
amidst
ongoing
discussions
about
the
future
of
these
properties.
According
to
the
General
Secretary,
the
primary
motivation
for
selling
the
hotels
appears
to
be
their
lack
of
profitability
and
for
this,
he
argues
that
there
should
be
a
prompt
change
in
management
rather
than
a
sale.
“Are
they
saying
hotel
businesses
are
not
good?
You’re
saying
the
SSNIT
hotels
are
not
making
money,
so
I
compared
and
analyzed
to
find
out
if
it’s
a
management
issue.
Then
they
should
remove
the
current
Management
because
hotel
business
is
not
bad,
especially
with
where
these
SSNIT
hotels
are
located,”
he
said.
Koomson’s
comments
suggest
a
need
for
a
thorough
review
of
the
management
practices
rather
than
divesting
the
properties.
Summary
of
the
report
The
issues
making
the
offer
unacceptable,
according
to
the
General
Secretary
of
GFL,
is
the
Extended
Payment
Period.
The
proposed
two-year
payment
plan
introduces
a
prolonged
period
of
uncertainty
during
which
SSNIT’s
strategic
objectives
will
be
on
hold.
The
second
is
the
Unequal
Bidding
Terms
which
suggests
that
other
bidders
did
not
have
the
option
to
spread
the
payment
over
two
years,
which
creates
an
uneven
playing
field.
Third,
Public
Scrutiny,
A
two-year
transition
period
could
subject
the
transaction
to
extensive
public
scrutiny,
potentially
impacting
its
success.
Forth,
Unconfirmed
Funding
Sources
which
suggest
the
proposal
lacks
a
clear
indication
of
the
source
of
funds
for
the
balance
of
the
acquisition
price,
raising
concerns
about
RCH’s
ability
to
complete
the
purchase.
Fifth,
No
Bank
Guarantee:
The
absence
of
a
bank
guarantee
in
the
latest
proposal
fails
to
provide
SSNIT
with
the
necessary
financial
security.
Sixth,
Non-Aligned
Objectives:
The
proposal
does
not
meet
SSNIT’s
objective
of
selecting
a
strategic
partner
with
the
required
expertise
and
financial
strength
to
turn
around
the
fortunes
of
the
hotels.
SSNIT
aims
to
limit
its
equity
holdings
to
26%-49%,
which
is
not
addressed
in
the
current
proposal.
Seventh,
Lack
of
Immediate
Full
Payment:
SSNIT
prefers
a
cash
transaction
with
full
payment
in
exchange
for
the
shares
and
management
control,
which
the
current
proposal
does
not
fulfill.
Eighth,
CAPEX
Commitment:
The
CAPEX
funding
plan,
which
includes
a
60/40
ratio
contribution
by
RCH
and
SSNIT,
may
add
financial
strain
and
complexity.
Ninth,
Inadequate
Financial
Capacity:
Financial
due
diligence
indicates
that
RCH’s
financials
cannot
support
the
semi-annual
payment
requirement.
RCH’s
projected
revenue
for
2024
is
insufficient
to
meet
the
installment
payments,
and
the
company
lacks
the
necessary
cash
reserves.
RECOMMENDATIONS
BY
THE
SSNIT
TRANSACTION
ADVISORY
TEAM
1.
Insist
on
Full
Payment:
SSNIT
should
require
full
payment
upfront
to
minimize
financial
risk
and
ensure
immediate
transaction
closure.
2.
Fallback
Option:
If
RCH
cannot
make
full
payment,
SSNIT
can
offer
RCH
the
option
to
purchase
only
one
lot
with
100%
payment
of
the
agreed
price.
RCH
can
negotiate
an
option
to
buy
the
second
lot
with
a
fixed
expiry
date
for
the
option.
3.
Bank
Guarantee:
RCH
should
be
required
to
provide
a
bank
guarantee
to
assure
SSNIT
of
their
financial
capability
to
complete
the
transaction.
4.
Revised
Term
Sheet:
SSNIT
should
attach
a
revised
term
sheet
template
backed
by
a
bank
to
clarify
the
required
financial
information
and
guarantee
terms
that
RCH
must
provide.