The management of SIF Transilvania has abandoned the restructuring of its tourism division and dismissed the team that had developed a 3-year action plan, hired only a few months ago, risking a lawsuit with the dismissed managers and the payment of compensations worth hundreds of thousands of euros.
SIF Transilvania is the largest owner of accommodation units in Romanian tourism, with a portfolio of 36 hotel companies, the most important being Orizont – Predeal, Aro Palace Brasov, THR Marea Neagra, Baile Felix, and Turism Covasna.
Despite investments in tourism, profits in this sector remain modest, with companies where SIF is the majority shareholder having a negative contribution in 2013, with a loss of 5.6 million RON.
Under these conditions, Executive Vice President Radu Toia, appointed to the management of SIF Transilvania in mid-2014, recruited Bruno Negoita last autumn, a specialist in business restructuring and recovery, who had a mandate to select and coordinate the team that was to restructure the activity of the hotels in the portfolio.
The financial performance improvement plan was to be implemented by Sigma Hotel Management SA, the new name of the Transilvania Travel company within the SIF portfolio, and aimed to increase the market value of the eight companies where SIF Transilvania held majority stakes: THR Marea Neagra, Aro Palace, Orizont Turism, Turism Covasna, THR Prahova, Tusnad, Tratament Balnear Buzias, and Turism Felix.
According to the managers’ lawyer, in mid-March, “without any just cause,” the mandate of the project manager, Bruno Negoita, was revoked, and the Sigma Board of Directors rejected the business plan proposed by the management team without any explanation. Additionally, the managers were informed that all employment contracts were void and were asked to sign the termination of contracts by mutual agreement.
Through the action plan proposed by the restructuring team, additional cumulative revenues for the next 3 years were estimated at 54.5 million RON and profits higher by 34.2 million RON compared to current projections. In the third year, 2017, the eight companies would have had a turnover of approximately 200 million RON and a net profit of 20 million RON, representing a 10% yield, whereas the yield for last year was 1.3%, and current estimates indicate yields below 1.7% for the entire period.
Source: Mediafax
Frequently Asked Questions
Why was the restructuring plan at SIF Transilvania halted?
The Board of Directors of Sigma Hotel Management rejected the business plan proposed by the specialist team without providing an official explanation.
Who is Bruno Negoita and what was his role?
Bruno Negoita is a business restructuring specialist recruited to coordinate the team responsible for streamlining the hotels in the SIF portfolio.
What were the financial objectives of the restructuring plan?
The plan estimated additional revenues of 54.5 million RON over 3 years and an increase in yield from 1.3% to 10% by 2017.