The P.E.I. government has approved a new financing package for Homburg International, which owns many of the buildings in downtown Charlottetown, worth $38.6 million.
The previous financing package for the company was for about $32 million. The direct holder of the loan is Dyne Holdings, which was acquired by Homburg International last year. Homburg International is a private company owned by Halifax-based businessman Richard Homburg.
Most of the major businesses in downtown Charlottetown are owned by Dyne Holdings, including Confederation Court Mall, the Holman Grand Hotel, the National Bank Tower, BDC Place and the Homburg Financial Tower.
P.E.I. Innovation Minister Alan Roach said that refinancing comes due every five years.
"If you look at many companies, and individual people who have mortgages, we find ourselves every five or ten years, we're refinancing. That's just a normal part of business."
Roach said the province has first mortgage on all the Charlottetown properties. Additional security was also added in this round of financing: the Dundee Arms Hotel, Richard Homburg's personal condo on Pownal Street, which is valued at more than $600,000, and some properties in Nova Scotia.
"This was a long process, and we wanted to ensure were in a good position coming out of these negotiations," said Roach.
"We feel very good about where we are today."
As part of the refinancing, said Roach, Homburg has settled with contractors who built the Holman Grand Hotel. They were owed more than $4 million. The government has also written off $34,000 owed in property taxes.
While the amount of the loan has gone up, the P.E.I. government is expecting a major payment on it soon. Roach said as part of a complicated restructuring process of Homburg's companies, P.E.I. should get a $6.1 million payment, which will be applied to the newly refinanced loan.