Ireka unit gets RM240m loan for Westin hotel

  • Business
  • Tuesday, 30 Nov 2004

Ireka Corp Bhd subsidiary Ireka Hotels Sdn Bhd, which owns the Westin Kuala Lumpur, has signed a RM240mil syndicated loan agreement to refinance the cost of building the five-star hotel. 

Ireka Hotels signed the five-year term loan with Aseambankers Malaysia Bhd (lead arranger), Malayan Banking Bhd, DBS Bank Ltd (co-arranger), the Employees Provident Fund, and Great Eastern Life Assurance (M) Bhd in Kuala Lumpur yesterday. 

Ireka Hotels deputy chairman Datuk Lai Foot Kong said he expected the increasing number of tourist arrivals to Malaysia to benefit the group’s hospitality and leisure division. 

“We are bullish about the hotel and tourism industry, and we expect the hotel and leisure division to contribute between 15% and 20% to group turnover in the financial year ending March, 2005,” he said after signing the loan agreement. 

The hotel and leisure division contributes about 10% to the group’s turnover currently. 

“With the loan, we will accrue 30% savings in terms of interest, compared with the current cost of financing, over the next five years,” Lai said. The yearly interest for the new multi-facility loan is expected to be less than 5%. 

Ireka Hotels Sdn Bhd deputy chairman (2nd from left) Datuk Lai Foot Kong exchanging documents with Malayan Banking Bhd deputy president Agil Natt after the RM240mil loan signing ceremony. With them are the other signatories of the syndicated term loan agreement

According to Lai, the Westin, which opened its doors in September last year, is enjoying an average occupancy rate of 70%. 

It was built at a cost of RM450mil, inclusive of land, in the heart of Kuala Lumpur. Ireka Hotels borrowed RM197mil to build the hotel, which is operated by the Westin international hotel chain. 

“The economy is expected to be strong next year, and we are confident that our target of higher contribution from the hotel and leisure division can be achieved with the expected increase in tourist arrivals. 

“Hotels in the city will definitely benefit from the bullish tourism sector next year. With its location in the heart of Kuala Lumpur, the Westin hotel will gain from the Kuala Lumpur Convention centre which is a stone's throw away,” he added. 

Malaysia is poised to receive 15 million tourists by the end of the year and RM30bil in tourism receipts. 

On the performance of the Ireka group, Lai said it would be in positive growth mode. “Our property development sector has shown huge growth potential, especially our flagship development in Mount Kiara. We have been recording very good sales, and our hotel division is contributing to turnover as well,” he added.  

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