ENVIRONMENT and Tourism Minister Netumbo Nandi-Ndaitwah will have an urgent meeting with Finance Minister Saara Kuugongelwa-Amadhila today to ask for millions of dollars to bail out Namibia Wildlife Resorts (NWR) once again.
The parastatal has failed to pay back a N$62 million Government-backed loan to the Old Mutual Medina Fund.NWR has threatened to retrench at least 200 people and close non-performing resorts if the ‘shareholder’ does not inject millions into the company before the end of July. In a letter, the NWR says the option of closing ‘loss-making properties … and retrenching approximately 210 people’ could be avoided if Government was able to inject at least N$160 million now, as part of an overall three-year investment of half a billion Namibia dollars, or, option number two, pay a total of N$322 million ‘immediately’.The letter urges Government to find a solution before the end of this month, otherwise the company ‘will be unable to honour its payment commitments to its vendors, financial institutions or its employee salaries’. The letter highlights the fact that currently NWR is committed to pay N$2,8 million a month in loan repayments and is sitting with financial liabilities of ‘N$95 million and rising’.Today’s meeting was called by Nandi-Ndaitwah in a letter on Monday, in which she requested an urgent meeting with Kuugongelwa-Amadhila to discuss the ‘NWR investment requirement’ and to discuss the Medina loan, which NWR secured to fund its turnaround strategy. Government guaranteed the N$62 million loan.In a letter sent to NWR Board chairperson Jackie Asheeke, dated July 15 2010, Old Mutual reminded NWR that the government guarantee would lapse at the end of July, and several issues of non-compliance with the loan agreements, plus outstanding payments, had caused concern at Old Mutual.The Old Mutual letter said the investment group was ‘concerned about the status of the loan, as we are currently non-compliant with the provisions of the government guarantee issued in favour of Old Mutual Namibia’.Old Mutual pointed out that NWR did not adhere to the requirement of Government to create a special fund which would provide back-up money to repay the loan. Old Mutual said they reminded NWR to create the ‘sinking fund’ in December 2008, which NWR nevertheless ignored. According to Old Mutual, NWR promised that a ‘written resolution from Cabinet to redeem the Old Mutual Medina loan by July 10 2009’ would be provided to the group. ‘To date, no communication has been received from NWR …’ the letter said.In early July, NWR allegedly informed Old Mutual that the Cabinet decision would be taken in July, but so far, Old Mutual has received no communication on the matter. Old Mutual gave NWR a deadline of July 31 to resolve the issue, and warned that the matter would be addressed directly with the Ministry of Finance at the end of the month. Calle Schlettwein, Deputy Minister of Finance, confirmed yesterday that the Ministry of Finance was meeting today with Nandi-Ndaitwah to discuss the issue of NWR’s Old Mutual loan facility.He confirmed that when NWR borrowed the money from the Medina Fund, the Ministry of Finance, as the backer of the loan, stipulated that NWR must create a ‘sinking fund’ – an account to put reserves in – in order to pay back the loan. He confirmed that ‘NWR never did that’ and that the issue was now up for discussion, as the guarantee by the Ministry of Finance would lapse at the end of July. The matter of the non-compliance with the loan conditions has lifted the veil on other financial issues at NWR.In an unsigned letter written by NWR senior management this month, NWR gave Government three bailout options and a deadline of July 31.The first option recommended that Government inject ‘N$468 million over three years’ in support of the second phase of NWR’s turnaround strategy.The second option proposed that ‘the shareholder immediately invests a total of N$322 million’, including ‘the immediate payout of the current financial drain of N$95 million debt of the company’.In addition, this injection would ‘instantly free up N$2,5 million per month in critically needed cash flow at NWR’.The letter reminded Government, the ‘shareholder’, that the success of both options was dependent on the ‘immediate finalisation of the title deed transfers of all NWR properties’.NWR did provide a third option, although it stated that this option was ‘not recommended’. The third option, NWR management said, would be necessary if the shareholder did not commit to option one or two.It suggested that in that case, the company would have to temporarily eliminate ‘the loss-making properties’ and threatened that NWR would be forced to retrench about 210 employees.jana@namibian.com.na
