ISLAMABAD: The government is likely to send a team made up of officials from the aviation division, the finance division and the legal division to negotiate with the union at the M/s Roosevelt Hotel, New York, in order to protect from floor marking and other emerging related issues, informed sources said company registrar.
The issue of the M/s Roosevelt Hotel, sources said, was highlighted during the Federal Cabinet meeting held on September 13, 2022.
On September 8, 2022, the Aviation Division submitted a summary to the ECC on “Challenges at the Roosevelt Hotel, New York, owned by PIA-Investment Limited (PIS-IL) and the way forward” with the closed session request on this publish. The Minister of Finance/Chairman of the ECC agreed to the Aviation Division’s request.
Roosevelt Hotel Corporation (RHC), New York was owned by PIA-Investment Limited, a subsidiary of PIAC. It was noted that the hotel business has been severely affected by the Covid-19 pandemic around the world. The occupancy level fell to single digits in 2020, which forced PIA-IL to close the hotel in December 2020 with federal cabinet approval to avoid a cost of $37 million per year. The ECC had approved $142 million for RHC to repay the outstanding loan, severance payments for approximately 500 employees and other liabilities such as local taxes, insurance, etc. Subsequently, the ECC re-approved $30.3 million on September 15, 2021 as a deferral cost for 2021. In accordance with the decisions of the ECC, the Finance Division had obtained funds through a loan from the National Bank from Pakistan.
The forum was informed that on July 2, 2020, the Cabinet Committee on Privatization (CCoP) approved the lease of the RHC site for the establishment of a joint venture project for a prospective development of mixed use, mode best suited privatization scheme as set out in PC Order, 2000 and directed PC to initiate the appointment of a financial adviser to undertake the exercise at its meeting on July 2, 2020. However, the litigation in Tethyan Copper Company (TCC) in Reko Diq case halted FA appointment process. Subsequently, after an out-of-court settlement with TCC, the Attorney General’s Office of Pakistan advised the Aviation Division to initiate the appointment process of FA and PC was requested accordingly.
The Aviation Division further shared two serious issues facing PIA-IL management, one related to the illegal demand of unionized employees and the other was the RHC floor markings issue. It was said that the Secretary of Aviation and members of the PIA-IL Board of Directors held discussions with all parties concerned, led by the Pakistani Ambassador to the United States. A post-visit report was also submitted to the Prime Minister’s Office on May 23, 2022. The PMO had directed the Secretary of Aviation to inform the RHC’s PIA-IL Board and that any confirmed proposals be presented to the competent forum. for other directions.
Secretary Aviation, in his capacity as Chairman of the Board of PIA-IL, called a meeting of the Board of Directors for May 31, 2022 and briefed the Board members on the affairs of RHC. After careful deliberation, the GoP’s decision on the following proposals has been requested: (i) in view of the above onerous demands from the Union and to mitigate the risk of ground marking, the GoP should reconsider its earlier decision regarding the permanent closure of the hotel and reopen it; (ii) PIA-IL/RHC to explore the possibility of reopening the hotel either on its own or through short-term rental agreements with third parties. Firm proposals for the said option with comparative financial analysis would be presented to the competent forum after conducting adequate due diligence by the professionals; (iii) PIA-IL/RHC will continue negotiations with the Syndicate and attempt to restore the status quo ante, however, in the event of failure, a firm commitment will be made to the Syndicate for a component of the Hotel under the redevelopment of the Roosevelt site; and (iv) the Privatization Commission be requested to expedite the implementation of the CCoP’s earlier decision to appoint a financial advisor to undertake the proposed lease of the Roosevelt site for the establishment of a joint venture project for the potential mixed-use development by the most suitable mode of privatization as set out in the Privatization Commission Order, 2000.
M/s Deloitte’s full report completed in 2019 and executive summaries from other assessors such as PwC, HVS, Cushman & Wake and MVS New York were also provided to the ECC.
The aviation secretary noted that the interim cost of reopening was $329 million, as reported by M/s Nehmer and M/s Interstate, however, the exact cost of reopening would be available once calls are made. offers launched.
The Aviation Division has also proposed that representatives from the Finance and Law and Justice Divisions not below the rank of BPS-20 may also be added to the PIA-IL leadership team traveling to New York. , in the United States, for negotiations with the union, in order to protect the RHC from the land. branding and other emerging issues related to RHCs.
Copyright Business Recorder, 2022