REG - Ceiba Investments Ld - Trading Update

Ceiba InvestmentsAnnouncement

22/02/2022 07:01

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RNS Number : 3295C  Ceiba Investments Limited  22 February 2022

CEIBA INVESTMENTS LIMITED

 

("CEIBA" or the "Company")

 

 

(TICKER CBA, ISIN: GG00BFMDJH11)

Legal Entity Identifier: 213800XGY151JV5B1E88

 

 

TRADING UPDATE

 

 

CEIBA, the largest listed international company solely dedicated to investing
in Cuba, with interests in Cuba's commercial and tourism real estate sectors,
is pleased to provide an update on trading, operations and investment in 2021,
in particular with respect to the operations of Inmobiliaria Monte Barreto
S.A. ("Monte Barreto") and Miramar S.A. ("Miramar") and the hotel development
of TosCuba S.A.

Inmobiliaria Monte Barreto S.A. - 49% interest CEIBA Investments Limited

Occupancy levels at the Miramar Trade Centre of Monte Barreto have been over
95% throughout the full 2021 financial year and demand for
international-standard office accommodation in Havana continues to exceed
supply, with Monte Barreto remaining the dominant option in this market
segment.

However, as previously stated in the Company's half year financial statements,
commercial real estate activities such as the ones carried out by Monte
Barreto have been excluded from some of Cuba's general rules relating to
"liquid" payments (the ability to transfer funds abroad on an autonomous
basis, without foreign exchange controls), and consequently the local payments
of many tenants of the joint venture are not deemed to be "liquid".

As a result, to date the joint venture continues to operate under limited
financial autonomy.  It is operating under a mixed regime having reduced
liquidity requirements, in which certain liquid resources of the joint venture
are generated by the joint venture itself from operations, and the rest are to
be allocated centrally by both the Cuban partner and the Cuban government. In
2021, Monte Barreto did not receive significant centrally allocated liquidity
rights as a result of the tenuous liquidity situation of the country.  In
addition, hard currency transfers from Cuban banks are experiencing delays.

The short term goals that the manager is presently pursuing with Monte
Barreto, its Cuban shareholder, and the relevant Cuban authorities is to
resolve the payment of dividends declared by Monte Barreto for the period up
to 30 June 2021, and to determine in what way, and through which authorized
legal exceptions, Monte Barreto will be able to obtain full financial autonomy
as from that date going forward.

Without such goals being achieved it is likely that the discount rates that
are applied to future cash flows in order to establish the fair value of the
Miramar Trade Centre will continue to increase. More importantly, the absence
of a structure that enables the Company to make solid projections of its cash
flow and to count on the cash dividend income generated by Monte Barreto would
likely adversely affect the ability of the Company to carry out its present
investment programs.

Miramar S.A. - 32.5% interest CEIBA Investments Limited

On 15 November 2021, Cuba re-opened its borders for international tourism and
expected to welcome a large number of travel-hungry (and Covid-19 tired)
Canadians, Europeans and Russians. A week later the World Health Organization
warned of the new Omicron variant.

The world-wide fear of this new variant prompted a rise in new travel
restrictions that resulted in heavy cancellations from Canada, the United
Kingdom and most European countries. As a result it would appear that Cuba's
path to recovery is expected to take longer than previously expected.

Under the negative circumstances described above, Miramar, the Cuban joint
venture company that owns four operational hotels in Havana and Varadero,
performed reasonably well during 2021 and is expected to present a modestly
positive 2021 operational year-end result. The Meliá Habana hotel operated
throughout the year as one of Havana's principal quarantine hotels, while the
Sol Palmeras operated on a skeletal basis. The Meliá Las Americas and Meliá
Varadero hotels re-opened during November and December respectively. The
income generated by the Meliá Habana, in combination with the positive
effects of Cuba's monetary reforms, formed the drivers behind the positive
result.  Under the financial autonomy rules, Miramar generates sufficient
liquidity (i.e. international tourism income) to make all of its dividend
payments.

TosCuba S.A. - 40% interest CEIBA Investments Limited

The construction of the Meliá Trinidad Peninsula hotel has continued to
progress throughout the pandemic, albeit at a slower pace.  Major efforts
were put into setting up and carrying out tender procedures for the
procurement of operating supplies & equipment and dealing with transport
and logistics. The procurement of furniture, fittings & equipment is still
pending.  Soft opening of the hotel is expected to take place during the
first quarter of 2023.

2021 Year End and 2022 Outlook

The above-mentioned drop in tourism income from the hotels of Miramar and the
expected lower valuations of both the hotel assets and the Miramar Trade
Centre will have a negative impact on the Company's 2021 audited year end
results that will be published at the end of April 2022.

However, if during the present year the Company is able to find a structural
solution to create financial autonomy for Monte Barreto and international
tourism continues to recover, and even more so if during 2022 the Biden
administration takes steps to ease the Cuban embargo, at least as regards
family remittances and U.S. travel, Cuba and CEIBA's liquidity position would
greatly improve which in turn could lead to a much brighter outlook for the
Company by the end of the year.

 

END OF ANNOUNCEMENT

 For further information, please contact:

 

Aberdeen Standard Fund Managers Limited
             Tel: +44 (0)20 7463 6000

Sebastiaan Berger, Evan Bruce-Gardyne

Singer Capital Markets
                                     Tel: +44 (0)20 7496
3000

James Maxwell, , Michael Nothnagel (Corporate Finance)

James Waterlow (Sales)

 

JTC Fund Solutions (Guernsey) Limited
 
Tel: +44 (0)1481 702400

 

www.ceibainvestments.co.uk

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