© Guardian photo
Holman Grand, Charlottetown
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 SchĂ¶ningh, who is CEO of the hotelâs owner Homburg Invest Inc., said it was clear the Holman Grand wasnât performing as expected.
âThis is not a decision we wanted to face,â 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 Grandâs 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 âexternal hotel fundingâ over a nine-week period, although it didnât specify where the funding was expected to come from.
That report also said Homburg Invest planned to stop paying for the Holman Grandâs losses, but didnât say when it planned to do so.
The news release issued Thursday said the Holman Grand has consistently generated operating losses and wasnât sustainable under Companiesâ Creditors Arrangement Act conditions.
SchĂ¶ningh 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 hotelâs guests.
âItâs 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,â 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.
âWeâve instructed legal to immediately demand our loan on the hotel and seek to enforce our first mortgage,â he said.
Roach said he didnât 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.
âIf they come back and pay us our loan then nothing happens, but if we continue on like that, weâll have to wait and see where that leads us when we demand our loan and thereâs a process that has to take place there,â he said.
âIt may very well be that the hotel will go up for sale somewhere down the road.â
Roach said the hotel is an attractive property in a good location.
âIâm being very optimistic that thereâs 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,â he said.
Opposition innovation critic Hal Perry said the government has been in talks with Homburg Invest Inc. for weeks, but shouldnât have loaned the company the money in the first place.
âIf they (government) had been fiscally responsible this would never have happened and they never would have had to cut a deal like this,â he said.