Announcement of IFC Investment in Pegasus Hotels of Jamaica Limited on October 25, 1968

I ,. HOLD FOR RELEASE. CORPORATION TELEPHONE; EXECUTIVE 3-6360 :FC ~~s Release No. 68/10 Subject: IFC Investment in Pegasus :or Release in Newspapers Hotels of Jamaica Limited ·tf Friday, October 25, 1968 IFC PROVIDES FINAHCING FOR LEADING NEW HOTEL IN JAMAICA The International Finance Corporation announced today that IFC and a group of private financial institutions are joining in establishing a new $8.5 million, 700 bed, convention and tourist hotel to be built in Kingston, with the aim of keeping Jamaica's tourism earnings grOW"ing. Kingston's new hotel will be larger than any presently existing on the • :sland, and will provide facilities now lacking i.n Jamaica for conventions. Construction will begin early next year, and the hotel is expected to connnence operations in the first half of 1971. The new hotel, to be called Jamaica Pegasus, is sponsored by BOAC Associated Companies Limited, a subsidiary of British Overseas Airways Corporation (BOAC), and by Forte's (Holdings) Limited, a leading British hotel and restaurant organiza- tion. They will provide technical and managerial leadership and parti.cipate in the financing. BOAC A.C. will be the principal shareholder, with ovet' a third of the equity capital. IFC is supplying nearly a third of the financing, in the form of both equity and loan capital. IFC is the World Bank affiliate which invests in private enterprises in its member countries. Several financial institutions are partici- • pating in IFC's commitment. They include Barclays Overseas Development Corporation (BODC) of London, which is also making its own equity investment; The Citizens (more) • - 2 - and Southern National Bank in Atlanta, Georgia, through a subsidiary, Citizens and Southern International Corporation; Banca Nazionale del Lavoro of Rome; and The Royal Bank of Canada International Limited, Nassau. The project will also receive loan capita 1 from Barclays n.c.o. of London. A substantial portion of the equity will be available to Jamaican private in- vestors, tht·ough an offering to be underwritten by the Jamaican Development Finance Corporation (JDFC). The Jamaica Pegasus is expected to be of both short and long term economic benefit to Kingston and to the Jamaican economy overall. During the construction stage the project is expected to create more than 500 jobs for a two year period, and to generate purchases of local raw materials of about $2 million. In operati it will open up some 450 jobs, 95 per cent to be filled by Jamaicans. It is ~ estimated that Jamaica Pegasus will bring in over $3 million foreign exchange earnings to Jamaica yearly, by 1972. Tourism is a major factor in Jamaican economic growth, currently con- tributing some $80 million a year, or a fifth of the country's foreign exchange earnings. This is second only to foreign exchange gained by bauxite exports. The tourist industry is also one of Jamaica's fastest growing employment sectors. But the potential of earnings from tourism is currently threatened by slow growth during the past five years of hotel building in Ja~aica. The establishment of a large first class hotl:l in Kingston is expected to maintain the impetus in the growth of international tourism to the island nation, and at the same time to help Kingston realize its potential as a center for business meetings and as a , stopping place for visiting businessmen. • The investment is being made in a new company, Pegasus Hotels of Jamaica Limited. (more) 'I t1  - 3 - • BOAC is responsible for overseeing the hotel's design and construction. Forte's Holdings will be responsible for manageroent and operation. Pegasus Hotels, IFC's second tourism project, reflects the Corporation's conviction that the tourist industry is an important means for economic develop- ment. In December 1966 IFC invested some $3 million in Kenya Hotel Properties Limited, for the construction of a hotel in Nairobi and game lodges in other part:t of Ken :."a. Pegasus is IFC's second investment in Jamaica. The first was a loan to the construction materials manufacturing and distributing company, Jamaica Pre-Mix Limited, in 1961. The total cost of the hotel project is expected to be $8.56 million. IFC has agreed to provide up to $2.91 million, or approximately a third of the • financing. Details of the financing of the Pegasus Hotel project follow: Eouity: BOAC A.C. will subscribe to $1.2 million equivalent in share capital; IFC, $620,000; Forte's Holdings, $600,000; and BODC, $240,000. A total of $720,000 equivalent in share capital will be offered to private Jamaican investors in the first quarter of 1969, with JDFC underwriting the issue. Loan: Barclays n.c.o. will provide a $2.4 million equivalent loan and IFC, $2.13 million. Suppliers' credits will provide an additional $600,000 equivalent. BODC will participate in IFC's loan to the extent of $480,000 equivalent. The increase in arrival of travelers in Jamaica has averaged 23 per cent annually between 1960 and 1967. High room occupancy rates during the past few years have indicated an inadequate number of rooms to meet demand, which is still growing. The building of Pegasus in Kingston will help make it possible for arrivals in Jamaica to increase at the 10 per cent a year potential currently • forecast • 1/: eriilllllliill