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Homburg Invest Inc. held more talks with the province about possible financing sources to pay for losses at the Holman Grand hotel, says the latest report from court appointed monitor Deloitte & Touche.
After months of speculation about its future, the Holman Grand hotel in downtown Charlottetown will be closing its doors Monday.
In a news release issued late Thursday afternoon, Jan Schöningh, who is CEO of the hotel’s owner Homburg Invest Inc., said it was clear the Holman Grand wasn’t performing as expected.
“This is not a decision we wanted to face,” he said.
Homburg Invest Inc. has been under creditor protection for more than a year and has sold several properties during that time. The company owes the province about $16 million it borrowed for the Holman Grand’s construction, for which the government has a mortgage guarantee.
During the summer, the company made the decision to put the hotel up for sale and has held talks with the province about getting money to fund the losses until a long-term plan for the Holman Grand was developed.
The court appointed monitor Deloitte & Touche has been releasing regular reports throughout the restructuring process and in the last report it included a forecast of $248,300 of “external hotel funding” over a nine-week period, although it didn’t specify where the funding was expected to come from.
That report also said Homburg Invest planned to stop paying for the Holman Grand’s losses, but didn’t say when it planned to do so.
The news release issued Thursday said the Holman Grand has consistently generated operating losses and wasn’t sustainable under Companies’ Creditors Arrangement Act conditions.
Schöningh said Homburg Invest has been operating in Charlottetown for more than a year and the company appreciated the dedication of its employees, as well as the patronage of the hotel’s guests.
“It’s very unfortunate that we have had to make the decision to close our doors. Our focus is on our Holman Grand employees and customers during this process,” he said.
When contacted Thursday, P.E.I. Innovation Minister Al Roach said the province is taking steps to recover the money Homburg Invest Inc. owes.
“We’ve instructed legal to immediately demand our loan on the hotel and seek to enforce our first mortgage,” he said.
Roach said he didn’t have any other information about the closure, other than that the hotel staff were learning about it Thursday afternoon.
When asked if the province could end up owning the hotel, Roach said the first step is to demand the loan.
“If they come back and pay us our loan then nothing happens, but if we continue on like that, we’ll have to wait and see where that leads us when we demand our loan and there’s a process that has to take place there,” he said.
“It may very well be that the hotel will go up for sale somewhere down the road.”
Roach said the hotel is an attractive property in a good location.
“I’m being very optimistic that there’s interested parties that would be interested in the property and our hope is this situation will resolve itself very quickly and we get all those people back to work,” he said.
Opposition innovation critic Hal Perry said the government has been in talks with Homburg Invest Inc. for weeks, but shouldn’t have loaned the company the money in the first place.
“If they (government) had been fiscally responsible this would never have happened and they never would have had to cut a deal like this,” he said.