The dispute among members of the Ibru family over ownership of Federal Palace Hotel in Victoria Island, Lagos and an economic downturn, has sunk Tourist Company of Nigeria (TCN) Plc.
TCN, like a ship wreck in slow motion, has been posting losses since 2014 according results published on the website of the NSE.
For the year ended 30th June 2016, the hotel and hospitality company posted a loss after tax of N5.54 billion, from a loss of N2.16 billion it recorded last year. Sales fell by 9.68 percent to N2.89 billion due to drop in its gaming and hospitality segment.
The company is facing accounting insolvency as its total assets of N10.53 billion cannot cover total liabilities of N17.53 billion, resulting in a negative equity N6.98 billion. Its accumulated loss of N12.24 billion validates recurring loses in the past.
The financial year under review was one of turmoil and disappointment for the Company and its shareholders. (TCN) battled with the rapid decline in the economy and a bitter shareholder dispute, all impacting negatively on the business, according to Goodie M Ibru, chairman of the company.
Goodie also attributed the operating loss to lower business volumes and the impact of higher costs caused by the weakening Naira. “The increased costs could not be passed on to our customers in view of the increasingly aggressive competition,”
A monstrous dispute with the Ibru Family, clashes with regulators and a weak economy is one of the reasons Sun International, the South Africa’s hotel and gaming group pulled out of the country.
In January, the Economic and Financial Crimes Commission (EFCC) launched an investigation into Sun
International initial investment in Tourist Company of Nigeria (TCN), owners of five- star Federal Palace Hotel.
Sun International had bought a 49 percent stake in NSE listed TCN in 2006, making it a majority share holder.
According to the Goodie Ibru $450 million mixed use real estate development for the Federal Palace Hotel and Casino did not progress as a result of the arrest and illegal detention of South African and one Nigerian member of management by the EFCC in January.
“Consequently the funding by the foreign investor in the development project was withdrawn. Furthermore, the EFCC action has dampened the appetite for further investment by Sun International Limited (SIL), the majority shareholder in TCN,” said the chairman.
In a lawsuit filed in 2012 by Mrs. Maiden Ibru, the current Publisher of the Guardian Newspaper and wife -late Alex Ibru, moved for the winding up of Federal Palace Hotel. According to a petition, she stated that TCN borrowed various sums: $7.1 million, N610 million, N381 million, and N19 million, between 2003 and 2004 which has not been paid back.
Further analysis of the financial statement of TCN shows total debt in the balance sheet of the company stood at N16.18 billion while finance costs increased by 96.91 percent to N5.10 billion in the period under review.
Nigeria’s economy is suffering its worst economic recession in 25 years due to a sharp drop in oil price since 2014 and severe dollar shortage. The economy shrank 2.10 percent in the second quarter, according to the National Bureau of Statistics (NBS).
The naira lost 37 percent of its value against the US currency due to the adoption of a flexible exchange rate by the central bank in June. That saw many firms record huge revaluation losses.
