The privatization of “President Hotel” risks to restrict the sale of a lease for a term to 2034г – Advisor

Davos. 31 Jan. INTERFAX-UKRAINE – LLC “Concord Consulting”, as part of a consortium of KPMG, “Bureau of Marcus”, Redcliffe Partners become Advisor to the privatization of PJSC “President Hotel” (Kiev), all efforts are being made to the competition were exhibited directly the hotel complex in the centre of Kiev, but the risk is limited to offer only a lease remains high, reported the General Director and the owner of Concorde Capital Igor Mazepa.


“Key: it is still not known what we sell: or it’s a huge hotel which will attract a large number of strategists and international players in the market, or is it just a rental agreement, which has its own cash flow until 2034. We finalize our views in the near future, after receiving information from our business partners Redcliffe Partners”, – he said the Agency “Interfax-Ukraine” on the sidelines “Ukrainian Breakfast”, organized by the Victor Pinchuk Foundation in Davos.


“We have almost completed all legal due diligence and completing operational due diligence. According to their results it will be clear to the procedure, it is possible to start the evaluation and our recommendations to the Fund”, – said Ivan Mazepa.

In his column on “Economic truth”, he pointed out that the “good” from the state property Fund of Ukraine on access to information about the “President Hotel” company only received 6 December 2018, that is 22 days later from the moment of commencement of the consultancy contract with the SPF, while the whole process of preparation of object for privatization it is allocated only 90 days. In this regard, “Concord” has addressed to Fund with the request to extend the period of project implementation.


The head of “the Concorde the Capital” has added that the completeness of information about the object received through official channels leaves much to be desired: from the “President-Hotel” is not received half of the requested information necessary for the analysis.


I. Mazepa stressed that the available information is sufficient to conclude that CHAO “President-Hotel” is not engaged in the hotel business, but because of the concluded in 2009 a 25-year lease of a hotel complex that includes the hotel itself and the surrounding area, his main source of income is lease payments from the private operator of the hotel.


“Today, our legal partner company Redcliffe Partners examines this lease. In particular, the possibility of divorce. Our goal is to put on a privatization contest ownership of the lease, and the entire hotel business”, – said the head of Concorde Capital.


Commenting on the fate of two other objects – the coal company “krasnolimansky” and pharmaceutical company “INDAR”, the adviser of privatisation which according to the results of competitions were also consortia headed “Concord Consulting”, Ivan Mazepa reminded that the beginning of the work on them is blocked litigation the loser in contests of companies.


“From time to time the appeal is delayed, plaintiffs sometimes are not hearing that they themselves initiated… All of this smacks of “lavacca”, but it is a question of the government and the SPF, as they are party to the process. When it will budge, we will come and honestly do our work”, – said the head of Concorde Capital.


Speaking about the four CHP that the Cabinet was removed from privatization in January of this year, although the “Concord Consulting” in September last year managed to win the competition for the right to act as an Advisor to their privatization, Ivan Mazepa noted that the substantial losses the company and the members formed the consortium did not suffer.


“Now and another lot of work. There was a lack of coordination between the SPF and the government, and I’m kind of glad it happened (the government has abandoned them to the General public in favor of transfer to municipal property – if) that is surfaced before the start of the process, not at its end”, – said the head of Concorde Capital.


As reported, in late July, “Concord Consulting” as part of a consortium of KPMG, “Bureau of Marcus”, Redcliffe Partners was the adviser for privatization of the coal company “Krasnolimanskaya”, “President Hotel” and “INDAR”. However, his approval for the remaining two companies is delayed due to litigation of the state property Fund with other candidates for councilors.


According to the draft decree of the government available to the Agency “Interfax-Ukraine”, the fixed part of the remuneration advisers will be 1,598 million UAH, subject to fulfilment of the terms of the contract, and in the case of the object provided for remuneration in the amount of 2% of value of sold shares.


In accordance with the disclosure system NKTSBFR, revenue of PJSC “President-Hotel” in 2017 decreased by 14% to 46.57 million UAH, while net profit rose 2.5 times to 13.43 million.


The CHOW report States that pursuant to the order of the state Administration Affairs on 17 April 2009, the company entered into a lease agreement with LLC “Construction company “Quadras”, which movable and immovable property and any other inventory objects located at the address: 12, Hospitalna street Kiev granted for temporary use for a period of 25 years.

The revenue of “Construction company “Quadras” in 2017 declined by 6.2% to 168,64 million UAH, and the net loss increased by 5.6% – up to 12.73 million.


In the state the main owner “Construction company “Quadras” is listed Cypriot “Tisanes Commercial Ltd.” – 91%, the ultimate beneficiary of which is indicated Cypriots Tasos Panteli and Andreas Sofokleous. Another 9% belongs to Odessa LLC “L. A. R. K.”, which is owned by Boris Kaufman and Cyprus “of Whares enterpraysiz Ltd”.

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