Author: editor

On 4 March 2025, in the presence of Cuba’s Minister of Tourism, Juan Carlos García Granda, the Meliá Trinidad Península Hotel and its employees received various awards in the context of the national “Workers of the Hotel and Tourism Industry Workers Day” for the outstanding contributions of hotel employees in cocktail and gastronomy events.

In addition, on 6 March 2025, the Hotel was awarded the prestigious National Energy Efficiency Award 2025 by the Cuban National Office for the Rational Use of Energy for its significant positive results in the application of solutions for the efficient use of energy, renewable resources and care for the environment in the services and tourism sector of Cuba.

We congratulate the management of the Cuban joint venture company TosCuba S.A. for having constructed an exemplary state-of-the-art hotel, and the staff and management of the Hotel for the important recognitions that they received.

On 20 October 2024, Management reported on the collapse of Cuba’s electrical system and the (then) projected landfall of hurricane Oscar on the North-East coast of Cuba. Below, an updated report.

Electricity Restored

As reported in the international press, Cuba’s entire electrical grid collapsed on Friday 18 October 2024.  The national grid was restored on Tuesday afternoon, in the fifth day of the crisis.  The entire population of the island and all businesses were affected by the outage, as were many other public services such as the supply of water and access to telecommunication services.

As previously informed, the Miramar Trade Center and the hotels in Havana, Varadero and Trinidad in which the Company has an interest were amongst the least affected and were all able to maintain principal operations, with limitations, thanks to installed back-up generators and – in the case of the Meliá Trinidad Península Hotel – solar panels and battery packs that make this hotel nearly self-sufficient.

Power from the grid was restored to the Miramar Trade Center and the Meliá Habana Hotel early on Monday morning, 19 October 2024, and to the Varadero Hotels and the Meliá Trinidad Península Hotel on Tuesday, 20 October 2024. We believe the managers of the hotels and hotel staff, as well as the joint venture companies, did a commendable job in maintaining as many services as possible and minimizing the impact of these difficult circumstances on the experience of hotel guests and clients of the Miramar Trade Center.

Notwithstanding the above, recent events have made it clear that Cuba’s electrical infrastructure is in a precarious state. Generation capacity is significantly below the total demand of the country and major investments are needed to maintain, modernise and increase the capacity of the existing infrastructure. In the immediate aftermath of the crisis, the Mexican government has expressed its willingness to provide technical support, and China is involved in large-scale projects for the installation of solar farms to add 1,000 MW of capacity by the end of 2025 and another 1,000 MW by 2031.

Hurricane Oscar

In addition to the failure of the electrical grid, the eastern extremity of the island was impacted by serious flooding resulting from hurricane Oscar, which entered the island as a category 1 storm.  The Cuban authorities have so far reported 7 fatalities from the storm, primarily as a result of flooding, as well as economic damages to infrastructure and the agricultural sector. Some areas remain unreachable so the full magnitude of damage has not yet been assessed. The hurricane did not have any impact on assets of the Company.

Power Outage

As reported in the international press, Cuba’s entire electrical grid collapsed on Friday 18 October 2024, twice again on Saturday and a fourth time on Sunday, as attempts were being made to reconnect the grid. The resulting nationwide blackout, now heading into its fourth day, has affected the entire population of the island and all businesses, as well as many other public services such as the supply of water and access to telecommunication services.

According to our on-the-ground managers in Havana, the Cuban authorities have confirmed that the process of reestablishing the electrical system continues to be extremely complex.

The present crisis is a result of an unfortunate mix of factors, including fuel shortages, the recent passage of hurricane Milton, lack of maintenance and upgrade of existing power plants, deteriorating infrastructure, insufficient installed capacity, and rising national demand. The U.S. Cuban embargo complicates matters significantly, preventing the supply and transport of imported oil, equipment and spare parts, and triggering excessive price-hikes at a time that Cuba’s tourism sector continues to struggle to recover the number of tourist arrivals and related tourism income to pre-COVID levels. In any case, it is clear that significant effort and investment will be required over time to make the electrical grid more robust and reliable.

In the face of these difficult conditions, the Miramar Trade Center and the hotels in Havana, Varadero and Trinidad in which the Company has an interest are amongst the least affected and so far have all been able to maintain principal operations, with limitations, thanks to installed back-up generators and – in the case of the Meliá Trinidad Península Hotel – solar panels and battery packs that make this hotel nearly self-sufficient.

The ability of the properties to continue operating in this fashion will depend on the supply of fuel to continue running the on-site backup generators.

Hurricane Oscar

In addition to the failure of the electrical grid, it is likely that Cuba’s East coast will soon be impacted by hurricane Oscar, a category 1 hurricane that is expected to make landfall between Baracoa and Moa and will leave Cuba as a tropical storm in the North of the City of Holguín.

We sincerely hope that Cuba’s electricity company (Unión Eléctrica) will be able to rapidly restore Cuba’s electrical grid and that the impact of hurricane Oscar will be minimal.

On 13 May 2024, an extensive research note regarding CEIBA Investments Limited was published by SINGER Capital Markets (“SINGER”), the primary broker of the Company.  SINGER’s main conclusion regarding the Company is as follows:

“… CEIBA has demonstrated an ability to operate in a difficult environment and owns profitable assets that are attractively valued that, subject to currency restrictions, are capable of generating a decent investment return. In addition (and there is no sign of this occurring), should the US relax or remove its sanctions regime, or should Cuba be more successful in its ongoing reform efforts, we see room for considerable upside from the normalization of asset values. The removal of Cuba from the controversial US State Sponsors of Terrorism list alone would have a significant positive effect on tourism to Cuba.  That said, the short term outlook is difficult and reflected in the fund’s valuation.  At this level and acknowledging the risks, we see CEIBA as offering an attractive asymmetric return profile for a long term investor…”

The research note can be accessed on Research Tree (https://www.research-tree.com/), or by financial institutions and investment professionals by clicking on this link.  By clicking on the link, you confirm that you are a financial institution or investment professional.

Introduction

In October 2023, TosCuba S.A. (“TosCuba”), a Cuban joint venture company in which CEIBA Investments Limited (“CEIBA”) holds an indirect 32.5% interest, received a copy of Cuba’s Supreme Court judgement in its favour rejecting the appeal of a March 2023 Court of Appeal decision confirming the original judgment issued in November 2022 by a municipal Court in favour of TosCuba.

The court case was initiated in May 2022 by TosCuba to demand payment under guarantees and damages resulting from the default by AEI Construcciones Trinidad and its partners under the turn-key construction contract executed on 5 April 2018 for the construction of the Meliá Trinidad Península Hotel. In the original November 2022 award, AEI Construcciones and its partners were ordered to pay to TosCuba approximately US$3.85 million.

The three favourable decisions are in line with the expectations of the legal specialists of TosCuba and confirm in this case the robustness of Cuba’s commercial legislation and the proper functioning of the commercial chambers of Cuba’s judicial system. Whether or not TosCuba will be able to obtain payment, in whole or in part, will depend on the liquidity and solvability of the parties involved.

Opening of the Meliá Trinidad Península Hotel

The Meliá Trinidad Península Hotel, largely constructed during the Covid-19 pandemic and its aftermath, is expected to open its doors in November 2023. It is a state-of-the-art international five-star hotel with the most modern amenities in Cuba. Fitted with energy saving systems, approximately 500kWh of installed solar panels and batteries, and located at the first beach next to the UNESCO world heritage city of Trinidad, expectations are high.

The official opening ceremonies of the hotel are scheduled to take place in January 2024 during the festivities surrounding the 510^th anniversary of the city of Trinidad, founded in 1514 by Diego Velázquez.

Stays at the Meliá Trinidad Península Hotel may be booked through the website of Meliá Hotels International: https://www.melia.com/en/hotels/cuba/trinidad/melia-trinidad-peninsula

Details of the Decision of the Cuban Supreme Court

On 29 September 2023, the Commercial Chamber of the People’s Supreme Court of the Republic of Cuba, the highest judicial authority in the country, ruled by way of final and binding judgement against the Cuban company DINVAI CONSTRUCCIONES S.A. and the Italian company TOMA S.p.A., the two parties to the International Economic Association named “AEI Construcciones Trinidad”, in their appeal of the judgement in favour of TosCuba issued on 27 March 2023 by the Civil, Family, Administrative, Commercial and Labor and Social Security Chamber of the People’s Provincial Court of Sancti Spíritus ratifying an earlier decision in favour of TosCuba rendered by the Commercial Chamber of the People’s Municipal Court of Sancti Spíritus whereby the Municipal Court found that the AEI Construcciones Trinidad and its partners were liable for numerous defaults under the construction contract and were ordered to pay to TosCuba damages in the amount of US$3,861,600 and CUP16,000.

Prior to June 2021, AEI Construcciones Trinidad was the turn-key constructor of the Meliá Trinidad Península Hotel. On 9 June 2021, the construction contract was terminated by TosCuba as a result of repeated defaults and delays in the performance thereof. From that point onwards, TosCuba, assisted by Mosaico Hoteles S.A., CEIBA Property Corporation Limited and Meliá Hotels International S.A., took on the full construction management of the hotel, including the contracting of all goods and services and the installation of all FF&E.

CEIBA, through its 65% shareholding in the Spanish company Mosaico Hoteles S.A., which in turn is the holder of 50% of the shares in TosCuba, has a 32.5% interest in TosCuba.

The latest comprehensive research note published by QuotedData for CEIBA Investments Limited is available to read below.

The note provides an update on the Trust’s portfolio, gearing, performance, charges and environmental, social and governance (ESG) considerations.

This is third-party research. You will leave the CEIBA Investments Limited website and enter Quoted Data’s to view.

CEIBA Investments – A long-term play