Plans to divest the Government's 59.81 per cent majority shares in Pegasus Hotels of Jamaica Limited have moved to the next level, with the Development Bank of Jamaica (DBJ), through its financial adviser Scotia DBG Investments, now inviting prospective investors to submit expressions of interest.

The DBJ is handling the divestment on behalf of the Urban Development Corporation (UDC), which holds the hotel's shares in its subsidiary, National Hotels and Properties.

In an advertisement Friday, interested parties were asked to provide sufficient information to demonstrate that they had sufficient resources and business experience to acquire and operate the hotel as a successful venture.

"We are hoping to get feedback from specific persons showing that they have the financial wherewithal," said Lissant Mitchell, senior vice-president at Scotia DBG Investments Limited.

"It is not an offer document but to pre-qualify persons for the next stage," he added.

Minority shareholders

Just two months ago, minority shareholders shut down an attempt by the UDC to amend the procedures used to select the hotel company's board in an attempt to give the new owner a free hand if and when a deal was sealed.

Whether a new vote on the amendment will be sought is to be determined at a later stage, Mitchell said.

Prospective buyers submitting expressions of interest will be screened to determine if they meet the requirements.

Successful parties will then be furnished with a pre-qualification document and other information to assist in making a firm bid for the shares.

Pegasus Hotels operates The Jamaica Pegasus, a 17-storey edifice with approximately 310 rooms. The Pegasus operates in a meeting market ,with rooms totalling over 1,500.

It has two restaurants, two bars and more than 1,300 square metres of meeting, conference and exhibit space.

Situated in the financial and business district of New Kingston, the hotel continues to feel the effects of the international downturn but remains optimistic that business will pick up.

"We have felt some impact from the economic downturn but are optimistic that we will do really well going forward," said general manager Eldon Bremner.

Hotel revenues for the first quarter ending June dipped 2.17 per cent to $270 million, compared to $276 million for the similar period last year.

But the company came out $3 million or 8.5 per cent ahead on net profit, recorded at $30 million, only because of a 10-year tax holiday granted under the Hotel Incentives Act to facilitate renovations under way.

"There has been a decline in international business traffic," Bremner acknowledged.

"With the economic downturn, people are travelling less to board meetings and other events. The traffic is slower, people are travelling in smaller groups rather than large delegations, and everybody is just cutting back."

A healthy balance sheet

At the same time, Bremner was quick to add that despite the downturn, Jamaica Pegasus remained financially sound and maintained a healthy balance sheet.

"... And our forward bookings look very healthy," he said.

Business accommodation accounts for 70 per cent of the hotel's income.

On its balance sheet, the Jamaica Pegasus reported net assets totalling $5.1 billion at the end of financial year March 2009.

The deadline for expressions of interest in the hotel is August 24, to be delivered no later than 4.30 p.m.

According to Mitchell, the advertisement was placed locally and regionally.

But even prior to the advertisement, at least four potential investors had already indicated interest in the four-star hotel.

Bremner said the hotel had already spent US$3.8 million on an upgrading project to renovate rooms, and that another US$1.2 million would be spent by year end.

business@gleanerjm.com