Holman Grand Hotel closing
Province intends to call in loan
Charlottetown's new Holman Grand Hotel will close on Monday, and the future of the downtown building is now uncertain.
The Holman Grand Hotel was caught up in the financial restructuring of Homburg Invest Inc. when it was put under court appointed protection last year. The court appointed Deloitte and Touche as the monitor.
Innovation Minister Allan Roach told CBC News Deloitte-Touche informed his department Thursday afternoon it was shutting the hotel down. Staff were informed at about the same time.
Roach said the news is particularly bad for those working at the hotel.
"Here we are, we're seven weeks before Christmas and they kind of move into town to let the staff know this afternoon that the hotel is being closed on Monday," he said.
"That is very unfortunate."
The P.E.I. government holds first mortgage on the property, a $14.5 million loan through P.E.I.'s Century Fund.
'We're not in the hotel business'
Deloitte and Touche reported last month the hotel was losing money, and it was looking for alternative sources of funding because Homburg Invest Inc. planned to cease its funding of the hotel losses.
Roach said the province will begin the legal work to call in its mortgage, but it does not intend to operate the hotel.
"We're not in the hotel business, we're simply a lender. If we call the loan and the mortgage isn't realized then the hotel will go up for sale," he said.
"It's very unfortunate. The Holman Grand Hotel is a terrific hotel. It's right in the downtown core of Charlottetown. It's connected to the mall and it's also connected to the Confederation Centre. It's a terrific spot."
The province is not the only creditor on the hotel. Seven contractors who worked on the hotel have filed more $3 million in liens. Fitzgerald and Snow is owed more than $1 million.
With the province foreclosing on the mortgage, payment of those bills remains as uncertain as the Holman Grand's future.
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