Samoa Government takes over $30 million Aggie Greys hotel shares

Photo: Association Meetings International

The Samoa Government now holds 30 percent preference shares in the Aggie Greys Hotel Limited which owns the Sheraton Samoa and Aggies Greys Hotel & Bungalows in Apia.

This was confirmed by the Minister for the Ministry of Public Enterprises (MPE) Leatinu’u Wayne So’oialo during an interview with Radio Samoa over the weekend. 

According to Leatinu’u, the shares are worth SAT$30 million (US$11 million) of Aggie Greys Hotel Limited’s mortgage with the Development Bank of Samoa (DBS) and are for a loan, which dates back to 1993 under the former Administration. 

The intervention by the current Government, said Leatinu’u, is based on the national interest having considered the premium facility and location of the hotel. This was done against the backdrop of Samoa hosting the Commonwealth Heads of Governments Meeting (CHOGM) in October 2024, when the expected guest numbers for the summit are likely to exhaust all major and premium accommodation venues in the country.

Leatinu’u said the Government has also endorsed offering a “grace period” for all the local hotels which were put up for auction after they failed to make repayments for their loans with the DBS. The objective is to give local businesses the opportunity to come back and prepare for the CHOGM next year. 

He said the Minister of Finance, Mulipola Anarosa Ale-Molio’o was invited by the China-based parent company of Aggie Greys Hotel to negotiate their agreement’s new conditions. 

The Aggie Greys Hotel Limited loan from the DBS was funded by a credit line facility through the Central Bank of Samoa. However, when the hotel was sold to Chinese business interest, the hotel’s former owner’s debts with other banking institutions in Samoa were cleared except for the one with the DBS which remained unpaid. 

Hit by major flood damage in 2018 – and with Samoa’s tourism industry coming to a standstill due to the Covid-19 pandemic lockdown – the hotel’s new owners were stuck and later learnt that there had been efforts to liquidate the company and buy back the hotel at a much lower price.

In the Cabinet decision, the current owners confirmed the financing of repair and upgrade works to be done for the hotel for a period of 8-10 months at the cost of SAT$42 million (US$15 million). But while SAT$30 million (US$11 million) of the mortgage has been transferred as the Government’s shares, there is still an outstanding balance of SAT$22,608,507 (US$8,341,811). 

The Cabinet has set the conditions for the repayment of the mortgage balance of this amount as granting a grace period of three years starting January 2023-December 2025; charging loan interest of 3 per cent effective from January 2026; monthly loan repayment of $220,000 (US$81,000) effective from January 2026; loan period of ten years; finalising other related conditions including insurance for the hotel and its assets.

The amount owed in the credit line facility made available through the Central Bank of Samoa (CBS) to the DBS now stands at SAT$37 million (US$13 million). The Cabinet has also directed the DBS to discuss with the CBS remedies to help with the repayment of the SAT$37 million (US$13 million), the DBS to discuss with the Ministry of Public Enterprises and the Ministry of Finance its proposal for possible reclassification of its status as a public trading body, and the appointment of the CEO of the DBS as a member of the Aggie Greys Hotel Limited Management Board. 

The DBS is also directed to submit to Cabinet progress reports on this task, every six months, commencing April 2023. The Aggie Greys Hotel Limited loan arrangements and payments are one of the projects listed under the Forensic Audit investigation. The arrangement of the credit line facility to the DBS.puts the spotlight on the Central Banks’ regulatory role.

This newspaper reported on behind-the-scenes negotiations between the Government and the Sheraton Samoa Aggie Grey’s Hotel & Bungalows in October of last year. Prime Minister Fiame Naomi Mata’afa, in response to questions from the media on an additional $10 million (US$3.6 million) loan for Sheraton, confirmed that negotiations are underway between the Ministry of Finance and the hotel’s owners on becoming a shareholder in the hotelier business.

She indicated that the thinking behind the move is so that the DBS doesn’t incur any losses.

“The truth is DBS has no money and the Government has to look at what should be done,” the Prime Minister added. “Whether that is by assisting the hotel for tourists and how that will be done. But at this time the last update is there were negotiations between the hotel and the Ministry of Finance.” According to Mata’afa, the hotel is in negotiations with the MOF because the government (during the term of the Human Rights Protection Party Administration) facilitated and approved the hotel’s initial loan of $53 million (US$19 million).