Soviets Pull the Rug Out From Hotel Partner : Politics: Russian Finance Ministry terminates the venture that built the first U.S.-managed hotel in the Soviet Union. Irvine-based Americom Business Centers Inc. will seek to reverse the decision.
Caught in a political shuffle in the Soviet Union, an Irvine development company’s pioneering hotel and business complex in Moscow is in trouble again.
Americom Business Centers Inc. said Monday that the Russian republic’s Finance Ministry has terminated a joint venture that built and operated the first U.S.-managed hotel and business center in the Soviet Union. The action, Americom said, was initiated by its Soviet partner, Intourist, which until recently had a monopoly on tourist trade in the Soviet Union.
The Irvine firm said it has protested the action and will seek a reversal. Americom and its U.S. partner, the Radisson Hotel Corp., have been negotiating with the Soviet and Russian parties to work out unresolved financial questions.
Since last summer, the Russian Federation has taken control over properties and buildings owned by the central government, including those belonging to Intourist.
This is the second time since July that the Russian republic’s government has threatened to dissolve the venture, said Stefan Harlan, Americom’s chief operating officer. The ministry has been demanding that Americom and Radisson come up with $2.75 million in financing for the venture. Americom owes about 80% of that amount. The Irvine firm had planned to raise its portion of the money by selling part of its stake in the venture to Comsat, a satellite company that supplied equipment for the hotel-business center.
Intourist is demanding that Americom’s share be paid entirely in cash, while Americom claims its agreement provides for partial payment with non-cash services. “If Americom cannot fulfill its (financial) obligations, we have no choice but to terminate the relationship,” said Anatoly Matytsin, director of Intourist’s U.S. headquarters in New York.
Four Russian and Soviet groups are seeking ownership of the venture, said John Norlander, president of Minneapolis-based Radisson. They are the Moscow City Council, the Russian Federation headed by Boris N. Yeltsin, Intourist and the Renaissance Fund, an investment group composed of Russian government agencies and private Russian enterprises.
Norlander said the confusion is caused by the breakup of the Soviet republics. Intourist, which constructed the $80-million building that houses the venture’s 430-room hotel and 165 business suites, is claiming ownership. But the Russian Federation and Moscow’s City Council both claim to own the property on which the hotel sits.
Norlander said he is optimistic that the problem can be resolved within the 60-day termination process.
