Questions raised over proposed sale of MTDC's Maguhdhuvaa lease

The Maldives Tourism Development Corporation (MTDC) is reportedly seeking to transfer the head lease of Gaafu Dhaalu Maguhdhuvaa to the Turkish company operating the resort on the island at a price alleged to be below market value.

According to information obtained by Dhauru, discussions are underway to transfer the head lease before the expiry of the current lease arrangements.

The government leased Maguhdhuvaa to MTDC on 17 September 2006 for the development of a tourist resort.

MTDC subsequently entered into a sublease agreement with Turkish businessman Ahmet Aydeniz on 26 October 2007. The company developed Ayada Maldives, which began operations in 2011.

The government's lease with MTDC was for a period of 25 years. The sublease agreement is also reported to have been signed for 25 years, with both agreements due to expire in 2031.

According to a source familiar with the matter, efforts were previously made to transfer majority ownership of MTDC to the government, which currently holds a 47 per cent shareholding in the company.

The source alleged that shareholders were offered additional shares at below market value to enable the government to obtain a controlling stake. It was further alleged that if public shareholders declined the offer, those shares would instead be sold to the government.

The source also claimed that the government influenced the board's decision to pursue the proposal.

According to the source, a majority of MTDC's board members oppose the proposed transfer of the Maguhdhuvaa head lease.

Reports indicate that the head lease could be sold for US$1.5 million.

However, under the existing sublease agreement, quarterly rental payments are reported to increase to as much as US$1.2 million during the term of the agreement.

With around five years remaining before the lease expires, the source argued that transferring the head lease for US$1.5 million would result in MTDC receiving substantially less than the remaining rental income due under the agreement.

The reported proposal comes days after the Privatisation and Corporatisation Board (PCB) removed Ahmed Niyaz as Managing Director of MTDC.

Attempts to obtain comment from Niyaz regarding the reported plans to transfer majority ownership of MTDC to the government and the proposed sale of the Maguhdhuvaa head lease were unsuccessful.