TIDMCBA
RNS Number : 6608I
Ceiba Investments Limited
03 April 2020
3 April 2020
CEIBA INVESTMENTS LIMITED
(the "Company")
(TICKER CBA, ISIN: GG00BFMDJH11)
Legal Entity Identifier: 213800XGY151JV5B1E88
COVID-19 Trading Update
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
In the light of the rapidly evolving situation resulting from
the spread of COVID-19 and its development into a global pandemic,
CEIBA Investments Limited ("CEIBA" or the "Company"), the largest
listed foreign company solely dedicated to investing in Cuba, with
interests in the commercial and tourism real estate sectors of
Cuba, today provides an update on current trading, operations and
investments.
Cuba
Although Cuba is not escaping the impact of the COVID-19
pandemic (with some 170 plus confirmed cases and 4 deaths as at 1
April 2020), so far it is playing a remarkably positive role in the
global health crisis. On 18 March 2020, Cuba allowed the British
cruise ship, the MS Braemar, with at least five confirmed cases of
coronavirus on board and 52 other passengers with symptoms, to dock
at the Cuban port of Mariel and allow its 600, mainly British,
passengers to board flights to the United Kingdom the same day. In
addition, Cuba has sent hundreds of doctors to Italy, Brazil,
Jamaica, Belize and other hard-hit countries, and the Cuban drug
known as "Recombinant Human Interferon Alpha 2B" seems so far to be
one of the more effective weapons against the COVID-19 virus. On 20
March 2020, Cuba announced a set of measures aimed at controlling
the spread of COVID-19 within its national territory, which
included border restrictions, and stopping the entry of
tourists.
Current Trading, Operations and Investments
The Company can report that in the first two months of the
current financial year there was no material COVID-19 impact on its
operations, trading and investments. However, as of March 2020
hotel reservations for the year started to be affected by
cancellations and decreasing flights to the Cuba, and the
construction of the 400 room hotel in Trinidad, Cuba, experienced
delays resulting from reduced construction imports from Europe.
Monte Barreto (as at 30 June 2019 held at US$71,736,000)
The operations of Inmobiliaria Monte Barreto S.A. ("Monte
Barreto"), the owner and operator of the Miramar Trade Centre
office complex in which the Company has a 49% interest, do not
appear to be materially impacted. Only a limited number of tenants
of Monte Barreto are airlines, travel agencies and other tourism
related companies that have suffered an instant loss of income.
Monte Barreto also has no debt financing and a cash balance in
excess of US$10 million which would allow Monte Barreto to operate
without income for an extended period of time if it were to become
necessary. However, the general liquidity situation in Cuba may
have a negative effect on the ability of Monte Barreto to
distribute dividends to its shareholders, including CEIBA.
Hotel Investments in Havana and Varadero (as at 30 June 2019
held at US$75,107,499)
As a direct result of the measures announced by the Cuban
government on 20 March 2020, Miramar S.A. ("Miramar"), the Cuban
joint venture company in which CEIBA has a 32.5% interest, which
owns and operates one hotel in Havana and three hotels in Varadero,
Cuba's principal beach resort destination, is temporarily closing
its hotels and substantially decreasing its workforce. Miramar has
no debt financing and a healthy cash balance in excess of US$40
million which allows Miramar to operate without income for an
extended period of time. However, the closing of the hotels will
clearly have a negative effect on the results of Miramar and its
ability to distribute dividends to its shareholders, including
CEIBA.
Hotel Investment in Trinidad, Cuba (as at 30 June 2019 held at
US$15,770,372)
In March 2020, the Italian-Cuban partnership that is
constructing the 400-room beachfront hotel in Trinidad, Cuba,
informed TosCuba S.A. ("TosCuba"), the Cuban joint venture company
in which the Company has a 40% interest that the construction will
be affected by the COVID-19 pandemic and will suffer delays. In
parallel, CEIBA is presently in discussions with TosCuba to
substantially lower the capital expenditure on the construction
until there is greater certainty around the repatriation of
dividends from Miramar and Monte Barreto that allow for the future
financing and construction of the new hotel. This will inevitably
extend the time-line and disbursement schedule of the construction
and to set a new completion date of the turn-key construction
contract. Further information will be provided when there is
greater clarity on the development.
FINTUR Facility (as at 31 March 2020 the Company is owed
EUR1,716,667)
As at 1 April 2020, the Company is owed EUR1,716,667 in a
finance facility secured by offshore income from hotels in Cuba.
Payment of the outstanding amount is scheduled to take place in
three monthly installments ending on 30 June 2021, but this
schedule will now likely be re-negotiated and the final payment
date extended.
Liquidity
As at the date of this announcement, the balance sheet of the
Company itself is strong and remains debt free and the operational
Cuban joint venture companies in which it holds interests are well
positioned to navigate the COVID-19 pandemic. The cash position of
the Company at holding level as at 31 March 2020 was in excess of
US$9 million.
However, the expected decrease in dividend income from the Cuban
joint venture companies Miramar and Monte Barreto, in combination
with the ongoing finance and investment requirements of TosCuba to
construct the Trinidad hotel, have made it necessary to take
several actions in order to safeguard the financial resources of
the Company and ensure its future.
Board Actions Taken
The current main concern beyond employee welfare and safety is
the impact of the COVID-19 pandemic on the Company. To mitigate the
effects of the pandemic and continue to carry out its investment
plans the Board has, amongst others, made the following
decisions:
Ø to support the decision of Miramar to close its hotels in
Havana and Varadero and substantially reduce its workforce;
Ø to support the decision of TosCuba to substantially lower
capital expenditure on the construction and agree on a revised
time-line and disbursement schedule at a time that there is greater
certainty around the economic and financial viability of the hotel
development;
Ø to discuss and agree with Casa Financiera FINTUR S.A. a new
payment schedule for the EUR24 million and EUR12 million tranches
(A and B) in which it originally had an aggregate EUR6 million
participation with a present residual exposure of EUR1,716,667;
Ø to restrict discretionary spending and non-committed capital
expenditure in Miramar and Monte Barreto;
Ø to carry out a detailed review of the costs and expenditures
of the Company and its subsidiaries with a view to limit
spending;
Ø to enter into discussions with third parties and shareholders
in order to obtain a credit facility of up to EUR15 million.
Dividends
In addition to the decisions outlined above, the Board has
decided that in light of the COVID-19 pandemic and the investment
requirements of the Company, it is necessary to change the
Company's dividend policy and not to declare a year-end dividend in
respect of the 2019 financial year . The Board hopes to re-consider
CEIBA's dividend policy for the year ending 31 December 2020,
however this will depend on the length and severity of business
disruption and the outlook for the remainder of the year. The Board
will inform shareholders on their decision on whether to distribute
a dividend in 2021 at the time of the announcement of the 2020
year-end results.
Outlook
Given the unprecedented levels of uncertainty at this time and
the lack of clarity on the duration of business interruption, all
previous guidance on the Company's future performance is being
withdrawn. An update will be provided once there is greater
certainty on the trading environment and the impact of COVID-19 on
the Company and its operations and investments in Cuba. The Board
remains confident in the long-term strong business fundamentals of
the Company.
Financial Statements
The Company expects to issue its results for the year ended 31
December 2019 towards the end of April 2020 and not to seek
temporary relief as offered by the Financial Conduct Authority on
26 March 2020 and to hold its Annual General Meeting as planned on
19 June 2020.
For further information, please contact:
Aberdeen Standard Fund Managers Limited
Sebastiaan Berger (Fund Manager)/Evan
Bruce-Gardyne (Client Director, Investment +44 (0)78 2353 3062/+44
Trusts) (0)77 2007 3216
N+1 Singer
James Maxwell / James Moat (Corporate
Finance)
James Waterlow (Sales) +44 (0)20 7496 3000
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END
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This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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