Pakistan dumps more money on deadweights: govt may okay $125m for Roosevelt

[valkyr_96]

https://tribune.com.pk/story/2259094/pti-govt-may-okay-125m-for-roosevelt?amp=1

Deadweights!
https://tribune.com.pk/story/225511...elt-suffered-loss-of-15-million-last-year-onl

ISLAMABAD:

The US President Donald Trump had been interested in buying the Roosevelt Hotel in New York, confirmed the managing director of Pakistan International Airlines Investment Limited (PIAIL), Najeeb Sami on Wednesday in a parliamentary hearing.

Sami’s statement at the National Assembly Standing Committee on Privatisation has given a new twist to the Roosevelt Hotel saga.

“The Roosevelt remained profitable for 99 years and suffered a loss of only $1.5 million last year,” Sami said.

“In the past, the Roosevelt Hotel has given $50 million cash loan to PIA and another $25 million as dividend,” he added.

The managing director of the PIAIL – a subsidiary that owns its hotels –agreed that it was not the right time to enter into a privatisation transaction due to overall economic slump, particularly in the tourism sector.

“My information is that the US President wanted to buy the Roosevelt Hotel,” Pakistan Muslim League-Nawaz (PML-N) leader Khawaja Asif said, who had been specially invited to attend the committee meeting.

Asif, a former chairman of privatisation commission and defence minister, is not a member of the standing committee.

“He [Trump] is still interested,” Najeeb Sami said.

The candid confirmation gives credence to rumours that the government wanted to privatise the Roosevelt Hotel in haste due to interest shown by the US president who is also real estate tycoon.

Asif noted that the PML-N was not opposed to privatisation but stated that this was not the right time to privatise any entity because the coronavirus pandemic had caused market price of almost everything to fall.

The PML-N leader observed that due to work from home policy adopted by the New York City government, office space was also in abundance in the city, thus, the proposal to demolish the building and build a multipurpose complex was also not feasible in these circumstances.

Sami also backed Asif’s stance and maintained that in the past two months, 83 hotels were closed down in the New York City.

He said that the Roosevelt Hotel cannot be turned into a profitable entity and its business model needed to be changed.

Sami said it was decided to give the hotel on lease on a long-term basis.

“The carpetbaggers who have real estate overseas business and were made part of the Roosevelt Task Force want to acquire the property at throwaway prices,” Asif said.

“People who own real estate businesses abroad should not be made part of the body deciding the hotel’s fate as it could lead to corruption,” he added.

Roosevelt Hotel was acquired by PIA Investment Limited on lease during the year 1979 with an option to purchase the property. The airline had purchased the hotel for $65 million.

Sami said that the air rights of the Roosevelt Hotel were with Hard 8 Venture company and there were two options to buy those back.

Asif said that it was a “mistake” on part of the PML-N that it remained unable to privatise the national flag carrier during its tenure.

Earlier this month, the Cabinet Committee on Privatisation (CCoP) had decided against selling off the Roosevelt and to run it through a joint venture instead.

The CCoP had to de notify the Roosevelt Hotel task force due to legal objections raised by the aviation ministry.

The CCoP had directed the Privatisation Commission to appoint a financial adviser to start the process for the transaction in light of a report by accounting firm Deloitte which recommended that “the highest and best use of the Roosevelt Hotel property is to redevelop the site into a mixed-use through joint venture of primarily an office tower over retail and condominium”.

But Asif said that the office complex model would also not work and in the present circumstances, the government should not change the hotel management structure.

Privatisation Minister Muhammadmian Soomro informed the committee that various options were currently being looked into regarding the fate of the Roosevelt, adding that a financial adviser will take the decision regarding leasing out the hotel.

“It would take around five years to demolish the hotel and build a multipurpose building,” he said.

He called for starting the process immediately to save the time.

 

[Falcon26]

Deadweights!
https://tribune.com.pk/story/225511...elt-suffered-loss-of-15-million-last-year-onl

ISLAMABAD:

The US President Donald Trump had been interested in buying the Roosevelt Hotel in New York, confirmed the managing director of Pakistan International Airlines Investment Limited (PIAIL), Najeeb Sami on Wednesday in a parliamentary hearing.

Sami’s statement at the National Assembly Standing Committee on Privatisation has given a new twist to the Roosevelt Hotel saga.

“The Roosevelt remained profitable for 99 years and suffered a loss of only $1.5 million last year,” Sami said.

“In the past, the Roosevelt Hotel has given $50 million cash loan to PIA and another $25 million as dividend,” he added.

The managing director of the PIAIL – a subsidiary that owns its hotels –agreed that it was not the right time to enter into a privatisation transaction due to overall economic slump, particularly in the tourism sector.

“My information is that the US President wanted to buy the Roosevelt Hotel,” Pakistan Muslim League-Nawaz (PML-N) leader Khawaja Asif said, who had been specially invited to attend the committee meeting.

Asif, a former chairman of privatisation commission and defence minister, is not a member of the standing committee.

“He [Trump] is still interested,” Najeeb Sami said.

The candid confirmation gives credence to rumours that the government wanted to privatise the Roosevelt Hotel in haste due to interest shown by the US president who is also real estate tycoon.

Asif noted that the PML-N was not opposed to privatisation but stated that this was not the right time to privatise any entity because the coronavirus pandemic had caused market price of almost everything to fall.

The PML-N leader observed that due to work from home policy adopted by the New York City government, office space was also in abundance in the city, thus, the proposal to demolish the building and build a multipurpose complex was also not feasible in these circumstances.

Sami also backed Asif’s stance and maintained that in the past two months, 83 hotels were closed down in the New York City.

He said that the Roosevelt Hotel cannot be turned into a profitable entity and its business model needed to be changed.

Sami said it was decided to give the hotel on lease on a long-term basis.

“The carpetbaggers who have real estate overseas business and were made part of the Roosevelt Task Force want to acquire the property at throwaway prices,” Asif said.

“People who own real estate businesses abroad should not be made part of the body deciding the hotel’s fate as it could lead to corruption,” he added.

Roosevelt Hotel was acquired by PIA Investment Limited on lease during the year 1979 with an option to purchase the property. The airline had purchased the hotel for $65 million.

Sami said that the air rights of the Roosevelt Hotel were with Hard 8 Venture company and there were two options to buy those back.

Asif said that it was a “mistake” on part of the PML-N that it remained unable to privatise the national flag carrier during its tenure.

Earlier this month, the Cabinet Committee on Privatisation (CCoP) had decided against selling off the Roosevelt and to run it through a joint venture instead.

The CCoP had to de notify the Roosevelt Hotel task force due to legal objections raised by the aviation ministry.

The CCoP had directed the Privatisation Commission to appoint a financial adviser to start the process for the transaction in light of a report by accounting firm Deloitte which recommended that “the highest and best use of the Roosevelt Hotel property is to redevelop the site into a mixed-use through joint venture of primarily an office tower over retail and condominium”.

But Asif said that the office complex model would also not work and in the present circumstances, the government should not change the hotel management structure.

Privatisation Minister Muhammadmian Soomro informed the committee that various options were currently being looked into regarding the fate of the Roosevelt, adding that a financial adviser will take the decision regarding leasing out the hotel.

“It would take around five years to demolish the hotel and build a multipurpose building,” he said.

He called for starting the process immediately to save the time.

Roosevelt’s value comes from its prime location rather than its operations. It’s a deadweight like it’s parent company PIA, Pakistan Steel Mills and Pakistan Railways and should be privatized as soon as possible so that the billions of dollars spent on these defunct entities each year can be used on the welfare of the Pakistani people,

 

[My-Analogous]

PTI govt may okay $125m for Roosevelt
Financing needed to lift New York hotel out of debt trap, secure its assets

PHOTO: Roosevelt Hotel Website

ISLAMABAD:
The Economic Coordination Committee (ECC) of the cabinet, which is scheduled to meet on Wednesday, is expected to approve funding of $125 million to enable Pakistan International Airlines Investments Limited (PIAIL) to rescue Roosevelt Hotel that has fallen into a debt trap and its assets are at risk.

Sources told The Express Tribune that the PIAIL chairman, in its letter sent on August 4, 2020, informed the Aviation Division that the financial health of PIA Corporation Limited (PIACL) neither permitted repayment of $50 million to PlAIL in the near future nor could it borrow any funds on account of a lack of cash flow and already pledged assets.

Therefore, according to the letter, the government of Pakistan has been requested to provide a financing of $125 million urgently, enabling them to secure PIAIL’s most valuable asset.

The Aviation Division had earlier informed the economic decision-making body that in the backdrop of Covid-19 pandemic, the hotel industry had been severely impacted across the globe. PlAIL-owned Roosevelt Hotel in Manhattan, New York has also experienced extreme cash flow constraints since March 2020.

The PIAIL chairman has provided detailed information in this regard pertaining to financial challenges being faced in running Roosevelt Hotel, potential source of funds, union issues, future outlook and board’s decision for government’s consideration and action.

The ECC was informed that even partial operations of the hotel were not sustainable at the moment. Roosevelt Hotel had acquired a loan of $105 million from JP Morgan at an interest rate of 5.05% with maturity in April 2021. Annual interest payment had been calculated at approximately $6 million.

JP Morgan later sold its loan of $68.25 million to MSD PCOF Partners. The sale of the loan complicated the situation for Roosevelt Hotel due to certain reasons.

For the past several years, MSD has been expressing its desire to be a joint venture partner in the development of Roosevelt Hotel’s site. MSD may attempt to leverage its position in achieving the goal. It also holds air rights in the vicinity of Roosevelt.

The PIAIL management was of the opinion that MSD had acquired the major portion of Roosevelt loan - by design - in order to become the sole lender and in case of default, it could quickly step in and seek foreclosure.

The matter was considered by the Roosevelt board in its emergency meeting held on July 3, 2020. It decided that the government of Pakistan should be apprised of the facts and its recommendations should be sent for the government’s consideration.

It proposed that Roosevelt’s operations should be shut down and all union and non-union employees be laid off against severance payment of approximately $20 million.

The board said the current debt of $105 million secured against property mortgage and with PIAIL’s guarantee should be paid forthwith.

It insisted that the $105-million debt and the cost of severance, if any, were Roosevelt’s liabilities and responsibilities, which needed to be paid/retained irrespective of whether the hotel was closed or remained operational.

In the backdrop of the current situation, a meeting was chaired by Adviser to Prime Minister on Finance Abdul Hafeez Shaikh on July 9, 2020 via video link where ministers for aviation and privatisation, Privatisation Commission secretary and senior officers of the Aviation Division and PIAIL participated.

It was decided that based on Roosevelt board’s recommendations, the Aviation Division and the Ministry of Privatisation would submit a joint summary to the ECC for its consideration.

https://tribune.com.pk/story/2259094/pti-govt-may-okay-125m-for-roosevelt?amp=1

Yeah, even Trump want to purchase it. Its total value is 1.6 Billion dollar currently and only need pro and trusted Management to make it profitable. Every New Yorker having dream to get married in this hotel and it is still status symbol there.

 

[ps3linux]

@ps3linux,

It is not a tragedy that crimes happen, the tragedy is that criminals are not punished after crimes. People who took loans with criminal intents and despite they being near, we will not punish them and excuse is they were being asked by the political leadership in Pakistan to do what they did.

Allah has a beautiful rule in this regard and that is everyone involved in a crime is a criminal and "I was forced to do" is not an acceptable excuse. If higher-ups (political leadership) cannot be proven to be involved, the people on the ground who executed, signed and contracted criminal loans should be punished straight for the crime they are proven to be involved in, and then we will have a reason to be hopeful that in the future "executes" will fear and deny to be used by the political scums.

When there are matters which "truly involve us", we do not leave it to others. When our family is at risk, we do not leave it to the police to protect and step forward ourselves. National defence is the same that in case of war, everyone (not just soldier) is at war.

We need to elevate the ownership and value of such assets in the public. We need to bring this matter close to people's hearts, so they start acting as they acting matters related to their family. Social media can help, but its a long road. A continued effort over a few years will be needed. Is that a big asking? Yes. Will it bring a big reward? Yes.

I have only touched upon the importance of this property and how as**oles in PIA, politics and bureaucrats made sure that its screwed as a business. And someone wants to take over the entire prime real estate at throw away prices.

Unfortunately there will not be any inquiry even if there is one, no one will be blamed, and even if there are legal charges brought up we have La-*hore high court, sind high court and Islamabad high court to let them free on the basis of technicalities.

Yeah, even Trump want to purchase it. Its total value is 1.6 Billion dollar currently and only need pro and trusted Management to make it profitable. Every New Yorker having dream to get married in this hotel and it is still status symbol there.

nailed it my friend.

 

[Falcon26]

Yeah, even Trump want to purchase it. Its total value is 1.6 Billion dollar currently and only need pro and trusted Management to make it profitable. Every New Yorker having dream to get married in this hotel and it is still status symbol there.

It has to do with the location and the history of the hotel.

 

[maithil]

https://twitter.com/x/status/1314249266546774016

 

[maithil]

https://twitter.com/x/status/1314262527543406594

 

[nahtanbob]

I believe workers of Rosavelt Hotel should go to Social Security Assistance in USA , why is Pakistan paying their salaries ?

Temporarily layoff the staff and USA's social security will cough up the bill

They deduct taxes for this insurance on every pay check from workers

social security is for retireed employees. you are probably referring to unemployment insurance

 

[AZADPAKISTAN2009]

social security is for retireed employees. you are probably referring to unemployment insurance

Thank you for correction , Yes Un Employment insurance is there for temporary loss of work , premiums are deducted from every pay check for it

The insurance , money is taken every 2 weeks from employees so if there is a layoff people can survive for up to year or so

 

[Blacklight]

@Falcon26 @ps3linux @graphican @valkyr_96

Gents, all that is required is a bridge loan, to maintain the asset for the next 6 months, after that it will get back on its feet, and we dont have to loose an asset for pennies.

 

[valkyr_96]

all that is required is a bridge loan, to maintain the asset for the next 6 months, after that it will get back on its feet, and we dont have to loose an asset for pennies.

Brother I have changed my opinion after Falcon26 make a good point on the real estate itself. It took me sometime to digest that our nostalgic value is not that important and it is up to the New Yorkers. If the consultants suggest that it is better off as apartments/offices type of building and given that we cannot go vertically because of air right (acquiring these make prove costly). It is better to exit this. Sorry to dampen your spirits.

 

[Blacklight]

Brother I have changed my opinion after Falcon26 make a good point on the real estate itself. It took me sometime to digest that our nostalgic value is not that important and it is up to the New Yorkers. If the consultants suggest that it is better off as apartments/offices type of building and given that we cannot go vertically because of air right (acquiring these make prove costly). It is better to exit this. Sorry to dampen your spirits.

No apology needed, just my two cents. If this works better, then why not.

 

[wali87]

excellent decision. Hope it goes through.

 

[Falcon26]

Brother I have changed my opinion after Falcon26 make a good point on the real estate itself. It took me sometime to digest that our nostalgic value is not that important and it is up to the New Yorkers. If the consultants suggest that it is better off as apartments/offices type of building and given that we cannot go vertically because of air right (acquiring these make prove costly). It is better to exit this. Sorry to dampen your spirits.

consider this; reinforces my earlier point that it’s real value comes from the location.

https://twitter.com/x/status/1314278755825672192

 

[Falcon26]

Pakistan now has a golden chance to sell off PIA, The Roosevelt Hotel and Hotel Scribe in Paris. The sale of these two hotels alone will bring at least $2-billon which can be used to settle PIA debt and then sell it also. Pakistan spends at least a $1-billion a year on PIA, money that can be better spent on high impact human development programs.

The sooner Pakistan sells of these defunct state owned enterprises such as Pakistan Steel Mills (PSM) Pakistan Railways, PIA, the better. No need to waste approximately $9-billon each year on organizations that have stopped generating profits, decades ago.