Homburg looking to buy it all back again

Ryan Ross
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In this file photo Richard Homburg, chair and CEO of Homburg Invest Inc. meets with Elizabeth Beale, president and CEO of APEC, in Charlottetown.

The provincial government has backed out of a deal that would have seen the Holman Grand hotel sold to Richard Homburg and all of the hotel’s contractors paid, says a source connected to Homburg.

The source, who asked not to be identified, told The Guardian the deal included the Holman Grand, the land the hotel is on, the Homburg financial tower and the Confederation Court Mall with Homburg Canada assuming all of the debt owed to the province for the properties.

Under the deal, there would have been no write-down on the hotel’s value but the loan repayment period would have been extended, the source said.

“There was no loss involved.”

Word of the failed deal came a few days after Premier Robert Ghiz confirmed the province had numerous offers from parties interested in buying the hotel, although he provided few details about any potential sale.

The Holman Grand has been closed for several weeks after its owner Homburg Invest Inc. shut it down because of unsustainable losses.

Homburg Invest Inc., which has been under creditor protection for more than a year, owes the province about $16 million it borrowed to build the hotel.

The provincial government has a mortgage guarantee on the hotel.

But it’s not just the provincial government that is owed money and the source said Homburg Canada was ready to pay the hotel’s contractors who outstanding bills for their work.

Homburg Canada has $3.7 million ready to pay the 39 contractors who are owed money and the company was ready to start writing cheques as of Dec. 1, the source said. It also would have re-opened the hotel as soon as possible and the source said Richard Homburg would still follow through on the deal if the government changes its mind.

The latest deal is not the first time Richard Homburg has tried to buy the hotel.

The source said Homburg has been trying to buy it for about a year, but various issues with the real estate investment trust that was involved, including a change in ownership, led to delays before the shutdown.

Although both companies bear his name, Homburg Invest Inc. and Homburg Canada are two separate companies.

Homburg Invest Inc. is a public company, and although Richard Homburg owns the majority of its shares, he has no input in its operations.

Homburg Canada is a private company through which Richard Homburg unsuccessfully tried to take over Homburg Invest Inc.

A takeover would have made the hotel and the land it’s on part of Homburg Canada, which would have avoided the creditor protection process.

When it comes to the hotel’s sale, Homburg Invest Inc., the provincial government and Cominar REIT, which owns the land, are all involved because they all have a stake in it.

On Friday, Innovation Minister Al Roach was asked about the province pulling out of a deal with Richard Homburg.

Roach said any deal would have to go through Cominar and he couldn’t discuss any of several offers that have been made.

“It’s a time when negotiations are delicate and I certainly don’t want to get involved in that. That’s for the people that are directly involved to deal with,” he said.

rross@theguardian.pe.ca

twitter.com/ryanrross

Organizations: Homburg Canada, Homburg Invest Inc., Holman Grand hotel The Guardian Confederation Court Mall Cominar REIT

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Recent comments

  • Fuzzy Bongo Head
    January 13, 2013 - 19:20

    So let's see the province pick up the property on the cheap and turn it into senior assisted living.

  • Ugly is as ugly does . . .
    November 26, 2012 - 07:42

    You know, at the end of the day the hotel is still ugly. Wonder if that's symbolic?

  • putz
    November 26, 2012 - 07:10

    Do people not understand that this offer was a consolidation of severaL LOANS INCLUDING THE $16 miLL and who knows how much for the rest of the 'package, (mall and tower). There were to be no money changing hands, the PROVINCE WOULD HOLD THIS LOAN, - AND HE WAS ASKING FOR AN EXTENDED PERIOD FOR PAY BACK. iN OTHER WORDS, THE TAXPAYERS WOULD CARRY A LOAN FOR WHO KNOWS HOW MUCH, FOR WHO KNOWS HOW LONG, --- the province could claim that they did not loose money on the deal, - and Humbug would be home free, - might never pay the loan back, -- bad deal,glad thre Province had the good sense to say no way, ---- they are not up tyo dealing with this guyand all the differrent companies.,

  • Ashamed of comments
    November 25, 2012 - 19:13

    Mr Homburg is not the person who owes the money to the contractors it is Homburg Invest who owes the money. Mr Homburg is willing to pay the 16 million owed on the hotel plus he wants to see the contractors paid. This was his biggest concern when Homburg Invest took over the hotel and could not manage it properly and eventually put it under creditors protection of which there was never a need for. Do not confuse Richard Homburg with the name Homburg Invest. Mr Richard Homburg is an honest person who would never ruin his good name by ripping people off. See below. Until March 2011, the Homburg Group also included the publicly-traded company Homburg Invest Inc. While this company continues to use Homburg’s name, Dr Richard Homburg resigned as Chairman and CEO of the public company in March 2011 to enable him to concentrate on new ventures free from any perception conflict of interest. Following his resignation, Dr Homburg came to realize that he “made a mistake by bringing in the wrong managers when it came time for him to step down as chairman of Homburg Invest”. Dr Homburg - who continued to own 72.5% of the voting shares - attempted to take the company private through a friendly take-over bid to buy the shares he did not already own. This was refused, and various unfortunate conflicts with management became public, including Dr Homburg launching a suit against the company for $27 million in damages. Dr Homburg then launched a second take-over bid to privatize the company, but management decided instead to seek shelter under a creditor protection arrangement Known as the Companies' Creditors Arrangement Act(CCAA). To this, Dr Homburg said : “This company had lots of liquidity. It’s an abuse of the system.” While the company continues to carry the Homburg name, it clearly no longer continues the Homburg philosophy of management and it has become a case study for Homburg Academy about how even the most seasoned businessman can lose control of a company by installing the wrong managers.

    • ELECTRICAL ENGINEER
      November 26, 2012 - 13:01

      You are absolutely wrong in saying that Mr. Homburg would pay the $16 Million Dollar mortgage. What he is asking for is that Homburg Canada be allowed to assume all the debts of all the properties and asked the PEI government to extend the period of the loan. They can't pay the loan now and he wants to acquire more debt and be given an extension on the existant mortgage.As much as I am loathe to give this government any credit, I will in this instance say that they did the right thing by declining this"offer". Your defense of Dr Homburg(honorary doctrate) leaves a lot to be desired.How can someone who,as you state own 72.5% of the shares and not be held accountable? I suggest Dr. Homburg get himself a new publicity agent, you don't seem very capable.

  • nick
    November 25, 2012 - 16:20

    TO; ASHAMED OF ISLANDERS, - all noble thoughts you have,but the facts speak for themselves, - the tradesmen should have been paid when the job was done , and they are still owed, so don't come and excuse that-- honorable people pay their bills and don't create one company after an other to hoot wink people, - if you have evidence to the contrary, please let' hear them

  • Dale Turner
    November 25, 2012 - 14:57

    Ratsinabarrell says: point 1. Richard Homburg owes nothing...Homburg Invest owes the money point 2. Richard Homburg has no position within Homburg 'invest. He is not on the board and does not occupy a "C' suite office point 3. Richard Homburg's name has been tarnished by Homburg Invest point 4 Richard Homburg is offering to buy the Hotel and other properties which will get the PEI gov't and we taxpayers off the hook. point 5. If this is Richard Homburg's idea of a way to clean up his name -tarnished by the actions of others, that I for one, am all for it. point 6. Mr. Premier seek out the best deal for taxpayers, the contractors and the City...and take it ! or you will carry yet another albatross around your neck. The load must be getting heavy by now

  • BLACKMAIL AGAIN
    November 25, 2012 - 14:16

    Let me get this straight. If the province gives him back the hotel and mall that he did not pay for, he MAY pay the contractors he owes. This guy did so well duping the local yokels the first time he decided to come back for more. Wouldn't you if it was as easy as it appears to be?

  • don
    November 25, 2012 - 11:53

    ASHAMED OF COMMENTS. that's why you only heard of him wanting to buy it back after it is closed so he can by it back at 10 cents on the dollar. then we are stuck for the rest. thats how big money keeps there money.

  • Islander
    November 25, 2012 - 09:51

    Richard Homburg should go to Summerside, he will have no problem dong business in that City after the millions of dollars that Mayor Stewart, Deputy Mayor MacDougall and Council gave away on the Small City Big Ideas. What an embarrassment to the world for such a nice City. Talk about leadership!!!!!!

  • bye the way
    November 25, 2012 - 09:21

    @NOT SO SILLY ...you are so silly if you think Homburg gave the Confederation Center $2 million ...no strings attached .The strings were...it was out of the $16 million that the P.E.I. gov't gave him .His company is gone bankrupt with his pockets full.... Could of been worse though...this gov't could have paid $8 mil on a golf course or $32 mil on Polar Foods. I'm sorry..maybe you are right..at least he gave us some of our money back and we have a new fancy smancy Hotel. Let's make a statue.

  • Ashamed of comments
    November 25, 2012 - 08:07

    I am ashamed to be an Iislander and read the comments on the forum from people who do not know what they are talking about. Richard Homburg is a man who pays his bills. There is only two comments on here that at least have some of the facts straight. Richard Homburg was only trying to create jobs for Islanders. He liked the Island and what he saw and thought it would be a great place to invest and create jobs. It was the greed of two people in the investment company (HII) that caused all of this fiasco. Richard tried to save the hotel when it first went into creditors protection but due to this HII company was unable to. If Richard Homburg says he will pay the people who are owed money...he will pay the people who are owed money. He will do what he says. This man has been in business for a long time and he has always paid his suppliers, employees and everyone else he has owed money to. To read what you people have written without even knowing the business side or what really happened here just makes me so ashamed to be an Iislander. Give the man a chance and I will bet you will be surprised.It is not the Goverment who is stopping Mr.Homburg from buying the hotel i, but I will bet it is the Investment company.When you understand what really happened please make your comments known.

    • What's missing may be courage
      November 25, 2012 - 09:28

      Nobody ought to blame corporatism for exercising corporate ideology anymore then we can blame a shark for being a shark. If blame has to fall anywhere, it's with those we elect to represent our interests, the common interests of most Islanders. Back when we were a tad more stupid, we believed that if we give our money to a few rich people they will make life better for the rest of us. However, in 2012 we should know better. And we do. But while knowing is necessary, it's not sufficient. We have to do something . . . and that takes courage.

    • Then why hasn't he paid them
      November 25, 2012 - 09:44

      If you know so much more than the rest of us, and if he is indeed a man who pays his bills, perhaps you would like to share with the rest of us why the tradespeople that actually built this hotel still have not been paid. Also please explain why the government is owed $16 million plus the $3.7 million the contractors are owed, on a property that has been appraised at $9 million and doesn't own the property it sits on.

    • To A Shamed
      November 25, 2012 - 11:36

      AShamed is right on one thing for sure.the people have written without even knowing the business side or what really happened. So, do tell. If there is something that will make the Islanders say it is all okay and prove that Mr. Homburg is a wonderful man who wouldn't hurt a fly, let along leave the taxpayers of the province on the hook for $16 million, we should all share this wonderful news. Mr. Homburg might start by showing a little 'good faith money' to the contractors who were badly hurt by the monolith they created, while blocking off a main artery in the city. Mr. Homburg was a shareholder in the company that did the dirty deed, so he had to know that things were going south. That is due diligence, a responsibility of shareholders...and let's not forget, his name was on that company.

    • Lucan
      November 25, 2012 - 13:17

      Look you could be right.Richard could be a great guy. Most likely as a rich man he is one that looks after his own cash. First and foremost. Anyhow that does not matter. The real issue is how poorly our government performed with this project. They obviously had a deal here from the start that guaranteed nothing except losses to the taxpayer. The only thing worse than the original deal is the pathetic cover story the government is attempting in this article. This story is only partially a leak from sources around Richard Homburg. The rest of the message is government's attempt to look responsible. LIke wow pretending to be rejecting the best result left to them. And they do not have any real say except pulling back their claim in court.And taking the loss. How pathetic.

    • Don Smith
      November 25, 2012 - 13:23

      Hello Ashamed,I totally agree with you,give the man a chance.I will say no more.

    • Ashamed Too
      November 25, 2012 - 13:55

      Richard Homburg does not owe the contractors anymore than any other individual shareholder of a company that is under creditor protection. However, he is offering to settle 100% of the debt owed to these contractors as part of the deal to buy back what he lost during the collapse of the real estate market and our government turns down the deals under pressure from the narrow minds of some Prince Edward Islanders. It is unbelievable that you think that some local or outsider is going to offer a better deal AND pay the contractors. The contractors need to be paid, the jobs generated by the hotel need to put back in place, the jobs of the people who work in the downtown need to be protected and all in order to generate tax revenue to pay for the likes of those who make ridiculous such as those posted here. Wake up!!

  • man
    November 25, 2012 - 07:11

    Interesting that this storey came from a leak from the Humbug camp. It was half a story. What loans are the taxpayers carrying for the Confederation Mall and Tower? Are the loan proposed for the hotel the same amount of $ 16 mill.? What 'extended' term is Humbug talking about ? 30-40-50 years on the taxpayers back?? With regards to the money owed to the tradespeople, --- that should not figure into it at all. He owes that money and should, with any mean available, be forced to pay it. Why should that be the taxpayers/gov. responsibility? Trades people, as much as I feel for them, had better wake up and insure guarantees in advance instead of jumping into bed with every crook that comes along. As for NICOLE writing above, you obviously have not grasped the whole picture here. The government will not get a red cent on this deal, - but would agree to a larger loan for a longer time, - that is it in a nutshell. - You may know that the money the Gov. lends out, is borrowed from other sources and the taxpayers pay interest to those sources, there is a cost to the taxpayers even if they were dealing with straight and honest people. As somebody said, - let Humbug go to the bank and come back and pay out his loans, --- hahah.

  • JohnW.A.Curtis
    November 25, 2012 - 03:32

    Where was the business plan that the government used to loan this company money. P.E.I. is now building a new Convention Centre. Halifax will be building a new Convention Centre. CRDC is now involved with lawsuits The Island harness racing industry is subsidize by 2 million dollars a year. We have four golf courses losing money. Summerside loses money on the Wellness Center. Anyone who points out these facts are labelled negative, no-one explains why people keep their jobs when taxpayers are loosing their shirts on poor ideas.

  • Maybe more
    November 24, 2012 - 17:36

    Too bad the PNP fund is no longer open. We still can lend / give him more $$$, and in return Mr. Hamburg can give a million dollars to the Confederation Centre to rename it the Hummingburg Fantasy Centre and have free tickets for all events, shows for all the friends and families of people involved. Come on, give him a break, he needs more help and besides, we still have 8.5 to 9 years left on the name of the Homburg Theatre.

  • Darrin Deveau
    November 24, 2012 - 16:34

    What a joke... I built rental properties...paid all my bills on time as promised and ...never had a single dollar of any provincial money ever!! I used all my own money.... I cringe at the thought of having to rely on provincial coffers to build and operate a business.....and here I am wanting to start another company...but yet I am more interested in investing my hard earned money in...FLORIDA....

  • peiguy
    November 24, 2012 - 16:16

    why would he pay off a companies depts when he is not the company? The Company is run by a bunch of other fellas that make their own decisons. he tried to save this hotel a year ago and was refused. at least he made an offer which included the quick payout of dept for the islanders. betch none of the others did.

  • stop acting like abunch of angry villagers
    November 24, 2012 - 16:12

    Having the Hotel in hands of a fella that knows how to make money isn't a bad thing. You others are missing the fact that Homburg Canada is a successful company with many many employees. Tell the people like you and me that work at the hotel that you would rather a company from quebec make the decisons and that the islanders and the island companies may or may not EVER get paid. Lets think bigger folks. He saw how the Invest managers were mishandling the hotel and tried to take control of it more than a year ago. Someone asked why the hotel...do you forget all the retoric about rejuvinating the down town core.. He at least still thinks Charlottetown is a good place to do business. If he and others get tire of the silliness and bad press how would we fare when big business starts to think it is not worth the headaches a bunch of locals with lots to say on no information. You shame me.

  • Gerard W
    November 24, 2012 - 13:27

    Just what kind of games are going on here??????????????????? No doubt it will be a SCHEME. for taxpayers to bare the BRUNT.

    • Nicole
      November 24, 2012 - 15:47

      If this story is accurate, HOW is it a bad deal?!?!?!?!?!?! Contractors are finally paid, people are back to work, government gets repaid (100 cents on the dollar...), and a decent place to stay is reopened in Charlottetown. Who cares who owns it! People seem to have a personal vendetta against a wealthy man, I've yet to see how any of it is "on the backs of Islanders" if all money owing will be repaid. The Ghiz government better be sure that any other deal surpasses what is reported here, otherwise, IT IS on the backs of islanders.

    • UPWESTER
      November 26, 2012 - 13:12

      Nicole, how naive of you. There is no proof that the contractors will get paid. The PEI government will not see one red cent, let alone $16 Million Dollars. What he is asking is that another of his companies will assume all the debt as long as the government extends the term of the loan. Please read and comprehend what is being said before you comment.

  • mac
    November 24, 2012 - 12:28

    Oh Lord this is priceless, ---- Humbug knows and the Prov. knows that that the hotel will never sell for $16 Mill. So Humbug knows that the Prov. need to save face and figured he would go for broke and ask for consolidation of all thge loasn and an extended pay back time, ---- using as the carott on the stick, that he would pay out what he owes the trades people.--If he has the money, why he is not doing that right now --- because only an honorable man would do that. - Worst of all, our politicans entertained the thought, -- we need to have Ghiz and gang declared incompetent , and be replaced by a guardian. We should also be getting Humbug`s file over from Holland, we may learn a thing or two, - namely don`t do any more business with this person. As an aside I would also like to know what, if any, contribution any Humbug enterprise have donated to the Liberal party of PEI., - maybe not even that----

  • alfredd
    November 24, 2012 - 12:11

    the guy got balls of brass - the others have mush

  • Mell
    November 24, 2012 - 11:51

    "Oh, what a tangled web we lead when we try to deceive!" as the old saying goes!

  • you're kidding me
    November 24, 2012 - 11:05

    We really are living in a fantasy world on this island - welcome to Ghisneyland, folks!

  • bruce macewen
    November 24, 2012 - 10:42

    Better get a double platinum certified checque this time,you yokels...

  • don
    November 24, 2012 - 10:08

    Innovation Minister Al Roach you no want to get involved LOL you will do as your master tells you to do.

  • don
    November 24, 2012 - 10:05

    NO WORRY DIZZY WILL LOAN/DONATE HIM THE MONEY. then we are screwed again. but you see he waited till it was closed then he can by it at a foreclosure sale. at maybe 10 cents on the dollar. but i thought he was BROKE?

  • denise crown
    November 24, 2012 - 10:01

    Homburg?! Are you kidding me? I can't believe it was even considered. At least they made the right decision in the end. If this Homburg media pressure makes them backtrack I will be utterly disgusted.

  • Janet Gaudet
    November 24, 2012 - 09:58

    Would someone please remove Homburg name off Confederation Theatre.............PLEASE! I don't call it by Homburg name when referring to it. The name is an embarrassment and makes Islanders look very stupid, gullible and naive. Actually, come to think of it, those words suit our present government very well, the way they get sucked in my so-called big business men coming to P.E.I. and stealing from Islanders.

    • not so silly
      November 24, 2012 - 16:02

      Sure you can change the name after you dDonate without strings attached more than 2 million dollars. Like he did.

  • Speaking Reason
    November 24, 2012 - 09:53

    Congratulations to government! Why on god's green earth would anyone support Homburg in getting back in there. We need some solid corporate citizens in this deal not the Homburg flash. Not surprised to see this newspaper picking the flashy/salacious side. Good decision making is too boring for these guys. I applaud government for taking a cautious approach on this. Keep it up!

  • Keith Mac
    November 24, 2012 - 09:49

    Not a chance! No deal for Homburg. He had lots of chances to be a stand up person and didn't!

  • George
    November 24, 2012 - 09:42

    Mr Homburg...you are not welcome here.

  • Unbelievable
    November 24, 2012 - 09:37

    Fool me once...shame on you, Fool me twice shame on______

  • SG
    November 24, 2012 - 09:28

    I'll wait and see what story comes out on Monday. As they say "What a Difference A Day Makes. " Who knows what Headline Islanders might be reading Monday.

  • unreal
    November 24, 2012 - 09:12

    Is it April Fool's day already?

  • Unreal
    November 24, 2012 - 07:39

    The provincial government has backed out of a deal that would have seen the Holman Grand hotel sold to Richard Homburg and all of the hotel’s contractors paid, says a source connected to Homburg. I CAN NOT BELIEVE THAT THE GHIZ GOVT WERE EVEN IN NEGOTIATIONS WITH HOMBERG AGAIN.

  • And the beat goes on.
    November 24, 2012 - 07:37

    Tricky Dick...Robbie is really over his head with this one.

  • Chet
    November 24, 2012 - 07:08

    Why are these provincial guys bouncing back and forth from pretending they have some kind of control here to admitting they are just pawns on the board.????? They did a lousy deal. There are no guarantees and very few protections here. They blew millions. They are putting on some kind of ' we are in control ' act. It is for fun, I guess,

  • Tom Paine
    November 24, 2012 - 06:59

    no surprise. This is what financial engineers do. The surprise is the length of time and the closure of the hotel. (And for The Guardian to say a majority shareholder in a company has no say in operations? Please, don't take the PR spin literally. Theresa Wright did a great job on the PNP, so it is possible to be a journalist at the Guardian.) The government can't allow this to happen, politically. My question is why the government has a say at all? This is under receivership, and the bankruptcy trustee makes the decisions, along with the creditors. If I were a creditor, with an offer to be repaid in full, and a more senior creditor said no, I'd be pretty upset. However, one can certainly question the likelihood of being repaid actually coming to pass.

  • Checker
    November 24, 2012 - 06:51

    This is incredulous! How can our political leaders entertain such nonsense. Enough is enough. The taxpayers demand a full investigation and a public inquiry. This Government is nothing but contemptuous of the citizen.

    • huh
      November 24, 2012 - 11:10

      You read the part about government backing out, right?

  • James McGoo Lakeside
    November 24, 2012 - 05:46

    Government is wise to move slowly on ths one. As pointed out in article Homburg Canada is a different company than Homburg Invest. Homburg Invest is current owner of hotel and owes government and contractors. Homburg Canada has no obligations to anyone as of today. If Homburg Canada buys hotel and and gets extended loan terms, what is to prevent Homburg Canada from informing province at future date they can''t make hotel work and will not pay loan owed? Good news is contractors would be paid, but government could still be at a loss on loan at future date. If the hotel wasn't seen as profitable this past year, what is changed to make it profitable now? Additionally are the Confed Mall and land being thrown onto deal at no cost? Let Homburg Canada convice a bank this is a good deal and use the new bank loan to make purchase and pay contractors. This deal may be reasonable and it may not. There are a lot of questions and information to be dislosed to the taxpayers before this should be decided.

  • Joe Martell
    November 24, 2012 - 02:00

    Let's just give Richard whatever he wants...we could rename 'Queens Square'...'Dick's Cube- The 2014 Legacy' !!!!!!!!!!!!!!!

  • Joe Martell
    November 24, 2012 - 01:41

    Premier...learn the lesson and move on! Thanks. Taxpayers!