11 Plc, formerly known as Mobil Oil Nigeria Plc, has announced plans to acquire Lagos Continental Hotel through its subsidiary company.
The oil firm made the announcement in a disclosure made available to the Nigerian Stock Exchange after finalising discussion on the property with the Asset Management Company of Nigeria (AMCON).
The disclosure was signed by the company’s Managing Director and Chief Executive Officer, Adetunji Oyebanji. Mr Oyebanji said the acquisition is, however, subject to the terms and conditions of agreed between the parties.
According to the statement, the hotel asset would drive the growth of the company’s revenue against the fuel margins, which it said had remained stagnant in the market for several years.
“Fuel margins in the industry have remained stagnant for several years in the highly competitive and regulated industry,” the disclosure said. “We anticipate that this asset will contribute positively to earnings and underlines the faith of its stakeholders in the future of the Nigerian economy.”
Last year, details emerged that the 358-room InterContinental Hotel would be defragged, following the collapse of talks between the United Kingdom-based property owner and its local partners over terms of rescuing the portfolio from receivership.
The company has been enmeshed in troubles for several quarters due to collapsing debt repayment talks and sundry operational challenges. A Lagos High Court had earlier ordered the defunct Skye Bank Plc, one of the lenders to the N30 billion InterContinental Hotel, to take over the property from its owner, Milan Group, over debts of $29.8 million and N3.8 billion.
InterContinental Hotel in Victoria Island, Lagos, the first property of the U.K-based Milan Group, was commissioned for business in September 2013 by Babatunde Fashola, a former Lagos state governor.
On Monday, 11 Plc said the acquisition of Lagos Continental Hotel is in line with its diversification plans, adding that it already “owns several prime properties in its real estate portfolio rented to blue-chip tenants.”
“However,” it said, “in the short term, cash flow and earnings before interest, tax, depreciation and amortisation could be under strain as a result of funds needed to renovate and upgrade the hotel to attract a 5-star branding.”
To allay the fears of staff of the hotel over possible mass retrenchment, the company assured the employees of the hotel that they would be treated with the utmost dignity and respect during the transition and sought their cooperation to make the takeover a smooth one.
As part of its branding policy for the new asset, the company said it would partner international brand to provide the luxury apartment service, as well as raise the standard of Lagos Continental Hotel from its current condition with significant investment that would transform the hotel into a top brand in the hotel service market.