No violation in UK hotel acquisition: Nishat Group

KARACHI: The Nishat Group has issued a fact sheet on Friday about acquisition of St. James Hotel & Club Limited, United Kingdom, in 2010 by the Mansha family, the sponsors of the group, whose members feature in the list of the top taxpayers in the country.
“Mansha Family proceeded with acquisition of St. James Hotel in the last quarter of calendar year 2010, backed by both due diligence and valuation by UK’s top professional accountants and consideration for acquisition of 100% shares of St. James Hotel was agreed at £32.709 million,” stated the fact sheet.
In line with the practice generally followed vis-à-vis foreign investments, the acquisition was made through a multi-tier structure for commercial reasons. The structure encompassed acquisition of St. James Hotel as a 100% subsidiary of M/s Sea Capital Limited, a company again incorporated in the United Kingdom.
The latter again is 100% subsidiary of a Singapore entity, that St. James Hotel is owned by M/s Sea Capital Limited could be crosschecked with publicly verifiable property records in the United Kingdom.
From the above, it is patently clear that, for Pakistan tax purposes, the obligation of Mansha family was restricted to the extent of declaration of interest in the Singapore entity, which it had all along properly fulfilled.
For commercial reasons referred to above, the acquisition was completed through a mix of debt and equity. Out of initial borrowing at approximately £27.0 million, made at the time of the acquisition, currently outstanding loan in Singapore entity is £11.3 million.
“The members of Mansha Family, owning shares in Singapore entity, have always declared in the statutory wealth statement the ownership of such shares. This acquisition of interest in Singapore entity has been funded by Mansha Family through properly taxed income, earned in Pakistan, and remitted through the banking system,” said the spokesman of Nishat Group.
“The repayment of loan by Singapore entity has again been financed exclusively by Mansha Family through their properly taxed income, duly disclosed in Pakistan tax records,” he added.“Nishat Group is the biggest taxpayer group and one of the largest employers in the country and all of the Nishat Group companies are listed in Stock Exchanges in Pakistan, audited by external auditors and the records duly filed with the concerned regulators,” he added.