The Development Bank of Montenegro has declined to authorize the agreement that was finalized at the end of last year between the Hotel Group “Budvanska Rivijera” and “Euromix – trade,” which aimed to resolve the longstanding issue surrounding the completion of the “Cristal Rivijera” hotel in Petrovac.

The management of Montenegro’s only state bank fears that agreeing to the terms would put its recovery of the remaining loan at risk, prompting a request for proof that funds have been deposited to progress with the project.

This information was unofficially confirmed to “Vijesti” by multiple sources.

The new leadership of Montenegro’s largest hotel company, predominantly owned by the government, has negotiated for “Euromix” to either clear its debts from a loan taken eight years prior or transfer ownership of the “A2” facility within the hotel complex, which includes 26 hotel units of significantly higher value.

“Euromix” had obtained this loan from the Investment and Development Fund (IRF) but failed to repay it; instead, “Budvanska Rivijera,” which was a co-debtor for the loan, took on the responsibility of repayment.

The IRF transitioned into the Development Bank at the end of last year.

“We support the ongoing efforts to settle the mutual obligations between ‘Euromix-trade’ and HG ‘Budvanska Rivijera.’ The proposed agreement submitted to us outlines several potential scenarios, among which the Development Bank can endorse the one where ‘Euromix-trade’ reimburses ‘Budvanska Rivijera’ for the amounts paid to IRF so far as the debt acceder and also pays off its remaining obligations to the Development Bank early. It is essential to provide thorough and comprehensive details regarding the foreign partner and their investment intentions upon project completion, along with evidence that the necessary funding has been secured and deposited into a dedicated account. Approval cannot be granted if the agreement puts the Development Bank’s position regarding loan repayment at risk,” cautioned the Development Bank.

A source from “Vijesti” mentioned that “Euromix” has communicated to both “Budvanska Rivijera” and the Development Bank that it has secured a partner prepared to invest in the project and bring to completion the hotel complex near Petrovac beach.

The joint venture agreement between “Budvanska Rivijera” and “Euromix” was established in late May 2011. It stipulates that out of a total of 269 accommodation units in the planned hotel, 48 will belong to the distinct “Cristal” hotel and will be transferred to the ownership of “Budvanska Rivijera.”

A building permit for the reconstruction of the “Cristal Riviera” hotel was only issued by the then Ministry of Sustainable Development and Tourism at the end of March 2014, with a projected completion date noted in the application as September 27, 2016. “Euromix” was to ensure that the accommodations assigned to HG “Budvanska Rivijera” were constructed in a separate wing adjacent to the “Palas” hotel, meeting five-star standards.

A loan agreement was signed between the former IRF and “Euromix” in December 2017, specifying that the approved funds were to be used for finalizing the hotel’s construction and operations.

On the same day, a debt accession agreement was made between the IDF and “Budvanska Rivijera,” securing a loan of 4,000,000 euros.

Because “Euromix” failed to meet its payment obligations under the loan agreement with the IDF, “Budvanska Rivijera” covered the payments.

After several years of negotiations, the two companies reached an agreement in late 2024, which received approval from the board of directors. The agreement outlining their mutual rights and responsibilities was submitted to the Development Bank for approval and explicitly states that both parties will withdraw from the legal disputes that have persisted for several years.

According to the agreement, the debt originating from the loan provided by the former IRF is structured such that “Euromix” will owe “Budvanska Rivijera” 25 million euros as of February 27 of this year.

This total debt includes the 2.55 million euros that “Budvanska Rivijera” has already paid on behalf of “Euromix,” along with an additional 156 thousand euros comprising three overdue annuities that “Euromix” must settle. Moreover, “Euromix” is required to pay “Budvanska Rivijera” interest at a rate of four percent per annum, calculated from each payment made by the state-owned company.

Regarding the repayment of the IRF loan debt, the agreement specifies that “Euromix” must repay the entire debt to “Budvanska Rivijera” within 90 days of the agreement’s conclusion. To secure this, “Euromix” has agreed to establish a pledge that will allow “Budvanska Rivijera” to place a mortgage on the “A2” facility.

If “Euromix” fails to meet its obligations within the specified 90 days, ownership of the “A2” facility, consisting of 26 hotel rooms, will transfer to “Budvanska Rivijera.”

By signing the agreement, “Euromix” also declared that if it defaults on its obligations, it irrevocably authorizes “Budvanska Rivijera” to be registered as the sole owner of the “A2” facilities.

The value of this portion of the hotel complex significantly exceeds the amount of the loan that “Budvanska Rivijera” has already settled on behalf of “Euromix.”

“Budvanska Rivijera” currently owns the “Cristal Palas” hotel under their joint construction contract, and acquiring this new facility will further enhance the capacities of this hotel group in Petrovac, which also includes the “Palas” and “Castellastva” hotels.

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