In response to «numerous articles published about KARIBEA / GFD containing inaccurate or even erroneous information, the group wishes to clarify a number of points» and has done so in a lengthy statement that explains in great detail what it believes to be the truth in this complex matter.
Through its KARIBEA brand, GFD operates 11 hotels in the Caribbean, making it the leading hotel operator in the region, with 400 employees and a capacity to accommodate 3,000 guests per day.
A recap of the facts. (We quote…)
A CONCILIATION PROTOCOL IN 2015
Amid a difficult economic climate in the French West Indies, on June 23, 2015, the Commercial Court of Fort-de-France approved a conciliation agreement between KARIBEA / GFD and its main public and private creditors, which allowed the group to reduce its debt by selling off a portion of its assets.
This legal decision, which provided for the sale of the buildings of four hotels (Salako, Clipper, and Prao in Guadeloupe, and Amyris in Martinique), made it possible to:
· to pay a portion of the group's debts in the amount of 10 million,
· to pledge the group's remaining assets as collateral for a loan with a 10-year term,
· to fund the necessary renovation and compliance work,
· and to invest 2 million euros in staff training.
This was not a «gift» or a «debt waiver.» Under this settlement agreement, creditors were paid a portion of their claims immediately, and the balance was deferred for 10 years.
This agreement was perfectly in line with the goal of ensuring the company’s long-term viability and safeguarding its 400 jobs, as well as giving it new momentum (renovation of several hotels: Salako, Clipper, and Prao in Guadeloupe; and Amyris and Amandiers in Martinique).
NEW CHALLENGES IN 2016 DUE TO DELAYS IN CONSTRUCTION WORK
The group had planned to close the hotels starting in early May 2015 for renovations.
The work was scheduled to take 6 months. Due to administrative delays and delays caused by the contractors in charge of the work, the hotels could not fully reopen until December 2016—18 months later. This situation, which was particularly damaging during the high season, resulted in significant operating losses.
In Guadeloupe, these delays are currently the subject of legal proceedings against the landlord, Foncière Caraïbes de Guadeloupe, a company managed by SEM Patrimoniale de la Région Guadeloupe, which is also in charge of the construction work.
Due to this delay and all the additional costs incurred (social security contributions, maintenance costs, training, etc.), the group recorded tax and social security liabilities of 7.5 million euros.
IN 2017, A NEW 6-MONTH OBSERVATION PERIOD
The group therefore filed for court-supervised restructuring to ensure the company’s long-term viability and preserve its jobs. After reviewing the cash flow projections prepared by independent certified public accountants, the court granted Karibea/GFD a 6-month observation period.
In this regard, it appears that revenue growth (+27% year-to-date through November 2017) and the group’s business outlook confirm the soundness of the decisions to renovate the hotels. These renovations have made it possible to offer improved service quality, welcoming both leisure and business travelers in a modern and welcoming setting.
ALL SIGNS POINTING TO A BRIGHT FUTURE FOR 2018
With 1,074 rooms, 11 hotels, 2,500 m² of fully equipped seminar space, and properties operating at near-capacity through May 2018 (a 90% increase in occupancy rate), the group has established itself as a leading choice for accommodations in the Caribbean.
All managers and staff are committed to ensuring that vacationers and business travelers leave with unforgettable memories of their stay in the Caribbean.
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QUESTIONS FOR PATRICE FABRE, PRESIDENT OF KARIBEA HOTELS / GFD
QUESTION 1: You have filed a petition with the Fort-de-France Commercial Court to initiate court-supervised restructuring proceedings with a 6-month observation period. What does this mean in practical terms for Karibea/GFD?
The situation in 2017 is as follows: Karibea hotels are reporting a sharp increase in business this year (+27% year-to-date as of the end of November), a full booking calendar through May 2018, and an occupancy rate of nearly 80% across all our hotels. The indicators are all positive.
However, a significant delay in the renovation work scheduled for 2015 prevented us from reopening several of the hotels on schedule (Salako-Clipper-Prao in Guadeloupe, and the Amyris and Amandiers hotels in Martinique). Due to administrative delays and delays attributable to the contractors responsible for the work, the hotels were not able to reopen permanently until December 2016. Due to this delay and the resulting additional costs (social security contributions, maintenance costs, training, etc.), the group incurred new tax and social security liabilities.
In light of these factors, I have filed for court-supervised restructuring. After reviewing the cash flow projections prepared by independent certified public accountants, the court granted us a new 6-month observation period during which an economic assessment of our situation will be conducted. This assessment will enable us to prepare a new business continuity plan to preserve jobs and continue operations under the best possible conditions.
I would also like to thank all the staff for their exceptional dedication, which made it possible to reopen the hotels after renovation and provide guests with a perfect welcome.(to be continued…)
