La Palm Royal Going
The La Palm Royal Beach Hotel, one of the Five-Star Hotels in the country, is on the brink of liquidation.
Daily Graphic investigations have revealed a huge debt profile and financial irregularities which are plunging the nation's premier resort into serious crisis.
The Ghana Commercial Bank (GCB), one of the hotel's major creditors, acting on a judgement given in its favour by an Accra High Court on June 28, 2005, has filed a motion at the court for the appointment of a receiver to manage La Palm in order to recover more than $21 million owed it by the hotel.
Documents from GCB available to the Daily Graphic indicate that La Palm defaulted in the repayment of a £6 million loan granted it by GCB, which subsequently increased to more than £19 million. Later, the parties restructured the loan to more than $21 million.
The court judgement will compel La Palm to pay GCB $21, 440, 217.70 or its cedi equivalent in respect of the loan, with an interest of $151,340 per month from June 30, 2000.
Legal authorities have explained that the appointment of a receiver will give GCB the right to assume the management functions of La Palm and take decisions, including one to sell the assets or request for official liquidation of the hotel, to recover its money.
To salvage the situation, however, the government has taken swift steps to bail La Palm out of its current financial predicament.
The government's intervention was sought by officials of La Palm and its majority shareholder, the Social Security and National Insurance Trust (SSNIT), at a meeting last Tuesday with the Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu.
Following that meeting, a Deputy Finance and Economic Planning Minister, Dr Anthony Akoto Osei, confirmed to the Daily Graphic that the government had responded positively to the distress call from the SSNIT and La Palm and had consequently requested GCB to temporarily hold on with its receivership application.
He said the action by GCB was not in the national interest, adding that the government had asked the Attorney-General and the management of GCB and SSNIT to explore further legal avenues to settle the matter amicably.
The exquisite Five-Star La Palm Royal Beach Hotel belongs to the family of Golden Beach Hotels in the country. The others in the family are the Elmina Beach Hotel in the Central Region and the Busua Beach Hotel in the Western Region.
La Palm has the reputation of being the premier resort in Ghana and has been a leader in the hospitality industry since it was opened in 1999.
It has 144 standard rooms, junior and presidential suites, eight restaurants and bars, the largest swimming pool, as well as the finest conference and meeting facilities, in the country.
SSNIT has 70 per cent shares in it, with Rexol International holding the remaining 30 per cent shares. SSNIT is said to have inherited the liabilities of the hotel when it acquired the shares.
The application for a receiver by GCB and the financial predicament of La Palm have serious socio-economic implications. About 300 employees of the hotel could be thrown out of job, while the tourism industry could be dealt a severe blow in view of the hotel's huge impact on the industry.
La Palm is expected to play a vital role in providing accommodation for international dignitaries during Ghana's 50th Independence anniversary next year, and the hosting of the 2008 African Cup of Nations (CAN 2008), among other major events.
Story By Edmund Kofi Yeboah