Hotels that have been foreclosed by the Development Bank of Samoa, now on sale are a long-standing issue of “historical” bad debts.
Prime Minister Fiame Naomi Mata’afa said the purpose of the DBS is to assist all sector’s developments, mainly agriculture however there were a lot more loans approved for the tourism sector, yet it should have been just a portion.
“Now that they are unable to repay their loans, it’s affecting all the entities that should have been assisted by the Bank and in turn, developments are on hold,” she said.
“The degree of indebtedness cannot continue and cannot be carried any further by the Government or the bank, otherwise this would end the bank’s operations, and a hard decision had to be made,” said the Prime Minister.
Adding that Cabinet approved the request by the DBS to take action against hotels with bad debts.
Last month three hotels were foreclosed by the DBS and put up for public auction, they are Orator Hotel at Tanumapua, Vaea Hotel Samoa in Togafuafua and Le Manumea Hotel at Vailima.
Regarding Aggie Grey’s Hotel and Bungalows loan with the bank which was about $50 million, Fiame said it’s different from the other hotels up for sale.
She said it was evident that once the Aggie Grey’s Hotel was sold [in 2017] the Grey’s paid their loans with the commercial banks but not the development bank and the company that bought the hotel took on the loan and they were faithful in paying their loans up until Covid.
“However that is not the same with the current hotels up for sale, their cases are historical whereas there were no repayments for over 15 years,” said Fiame.
The Prime Minister further confirmed there are ongoing negotiations on whether the bank should consider converting the Aggie Hotel’s loan as shares.
However, the Government needs to understand the in-depth agreement on how the previous Government facilitated the loan with Aggie Grey’s and whether it is an investment that should be considered. Talks on this matter are continuing.
The Hotel took on a huge loan to rebuild the hotel after it was demolished by Cyclone Evan in 2012.
