Maldives Tourism Development Corporation Public Limited Company (MTDC) has announced that it will be selling the company’s first resort Herathera Island Resort to a Singaporean company for USD 33.3 million.
MTDC Executive Director Ahmed Niyaz stated that four companies had shown interest by the time the announcement of sale of the resort had expired on December 31, local media reported.
Niyaz stated the contract had been awarded to the highest bidder Singaporean developer Canaries Pvt Ltd.
“We decided to sell the island to whoever offered the highest price. Thus, as Canaries submitted the highest price, we are now in the process of handing over the award letter to them. We will do so within the next two days,” he said.
He further revealed that the second highest price had also been submitted by a Singaporean company, whle the third highest price was offered by Maldivian businessman ‘Champa’ Hussain Afeef’s Treetop Maldives company.
The fourth party to have expressed interest was a Malaysian company which, according to Niyaz, had been disqualified for not fulfilling the requirement of submitting a bank guarantee of USD 1 million.
Niyaz stated that Canaries Pvt Ltd must submit the full payment for the island within thirty days of the award letter being issued. If it fails to do so, the company’s bank guarantee will be claimed by the Maldivian government and the island will be sold to the next highest bidder.
The previous board of directors of MTDC had decided to sell the four star resort to Champa Hussain Afeef for USD 30 million. However, the decision had been revoked after the board was recompiled.
Herathera Island resort will be rebranded under the Amari Estates Company, Property Report has revealed, after the Thai-based hotel group ONYX Hospitality were appointed managers of the resort in November 2010.
Onyx Hospitality is a joint venture in which Amari Estates holds a minority stake.
Refurbishing and rebranding the resort will cost US$3.31 million, the Amari said, adding that the group would sign the official agreement on January 15, 2011.
A long-running legal dispute over the Herathera Island Resort between the Maldives Tourism Development Corporation (MTDC) and Yacht Tours Maldives (YTM) concluded in January 2010.
MTDC had claimed that YTM had been running Herathera Island Resort without paying rent and took the company to court. In May 2009 YTM was ordered to pay US$8 million in outstanding rent to MTDC.
YTM stopped paying rent in December 2008, claiming MTDC had failed to fulfil a contractual obligation to build a channel between Herethere Resort and Hulhudhoo, an adjoining inhabited island, by 30 November 2008.
In January 2009 MTDC agreed to pay Yacht Tours US$3.5 million to end the court dispute, and regain control of the resort.
Profits of the Maldives Tourism Development Corporation (MTDC) in 2009 dropped 29 percent to Rf86 million, according a report in Haveeru.
In its annual report MTDC claimed management issues at Herathera resort were the major reason for the decline in 2009. The company received a profit of Rf46.6 million from the resort in 2008, but this fell to Rf76,458 in 2009.
MTDC also invested heavily in settling disputes with Yacht Tours Maldives, spending RF23.3 million to extricate itself from the arrangement and losing a further Rf17.3 in land rent.
The report also blamed the 2009 economic recession for MTDC’s difficulty in obtainnig bank loans to pursue investment projects.