The Mount Meru Hotel in Arusha is set to receive USD 24 million in investments as the result of syndicated loan agreements in order to rehabilitate the dormant hotel and will also help to revitalize the Tanzania tourism at the same time.
The syndicated term loan agreement involved two local banks and one regional bank and was signed in favor of Hodi (Hotel Management) Limited.
The majority portion of the financing project is CRDB Bank in the amount of USD 11 million, with a secondary portion of USD 11 million being sponsored by the Eastern and Southern African Trade and Development Bank, commonly known as PTA Bank, and the remaining USD 3 million being sponsored by Tanzania Investment Bank (TIB).
According to a report by The Citizen Dr. Charles Kimei, the CRDB Bank managing director, has said that placing a large emphasis on investments is the only way to help support and sustain the country’s economy during the global economic crisis.
“We need to invest more so that we can drive the economy out of the crisis,” he said, “it will be very easy to get out of the crisis if we do the right things by investing more now.”
The New Mount Meru Hotel was sold to the Blue Jewel Company following its privatization in 2004 by the Presidential Parastatal Sector Reform (PSRC).
“A key condition to this sale,” said Dr. Kimei, “was the undertaking by Blue Jewel to refurbish and upgrade the hotel to an internationally acceptable standard.”
The CRDB managing director went on to say that, following the purchase, Blue Jewel began seeking an adequate strategic partner with both business management expertise and credibility in order to help facilitate the mobilization of funds so as to properly rehabilitate the hotel.
In addition, Dr. Kimei also emphasized that the financing of the project was to be the result of an equity contribution of 41 percent from local and foreign investors as well as long term loans from commercial and development banks.
“It is worth noting that of the 41 percent equity contribution, which is USD 17million, foreign investors will contribute 90 percent and the rest will be contributed by a local investor, Blue Jewel Company Limited,” he said
According to the report by the Citizen, one of the benefits of the project is that it will help to support the government upon its completion as well as simultaneously creating over 300 jobs.
The project is anticipated timeline for the project is 15 months and is, therefore, expected to be completed and ready to be re-opened by the end of next year.