MBO Interview
MBO Interview
Jerome PHILIPEAU President and CEO of VICHY, a possible partner for the “dr Simo Milošević“ INSTITUTE - Igalo, Montenegro
The French company, Vichy Group, applied for 56.48% of the state capital in the Dr Simo Milošević Institute in Igalo through a privatization tender process which was published at the beginning of August. Vichy is the European leader in the management of thermal and spa-centers. Its annual consolidated income, including the income of other partners that supported the offer, most significantly the French company, L’Oreal, is € 2.3 billion. Vichy has three thermal spas with a capacity of 270 cabins, three
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hotels with a capacity of 400 rooms and a network of more than 300 associates. Within each hotel there is a health center, thus transforming Vichy’s complexes into unique medical-rehabilitation centers. Annually Vichy has a turnover of more than 130,000 therapy days and 90,000 over night stays that are directly associated with thermal therapy. The British Spa International Association presented Vichy with the award of best spa-hotels in Europe in 2011 Les Célestins.
Jerome PHELIEPAU said in his interview that after more than a year of careful preparation, Vichy patiently waited for an announcement regarding the sale, through tender process, of the state capital held in the Dr Simo Milošević Institute. During this period he said that the Vichy team had been present, on several occasions, at the Institute, in order to become familiar with the characteristics of the building and to identify areas that would require the most investment. Considering that the regular business of the Institute can’t be interrupted during the investment period, Vichy made plans about how to succeed in such a way that any investment would provide the best possible service to guests. Pheliepau stated that during this period, Vichy had felt increasingly reassured about the professionalism of the Institute staff, and about its vision of new management which would provide a good basis for developing the Institute in the future. He continued to say that, despite the fact that Vichy had become aware of negative elements in the work of the Institute, he believed that there were possible solutions. His final words were, “I believe that we will work in cooperation with those in charge of the Institution, at both local and national levels, and that we will solve all of the problems that we have identified to better position the Institute in the international market.” Certain media comments suggest that the offer of your competitor, MK Group from Serbia, is better. How do you react to such comments? We are professionals and business people who keep our word. That means that we will adhere to the tender rules and will not comment on any other offer.
Even though we are not aware of the references of our competitors concerning their performance in the area of work of the Institute, we wish them all the best. We strongly believe that the authorities that are in charge of the privatization process in Montenegro will perform their work in a qualitative manner. We hope that we have made their work easier with our offer and that our intention to invest € 33 million in existing facilities and € 117 million in new facilities will be of interest to them. The auditing company Ernest & Young has already checked the investment credibility of our offer and has confirmed our ability to proceed. Vichy is also ready to invest almost € 2 million in a very ambitious marketing plan that would give coverage right across Europe and the rest of the world, and would represent the services offered by the Institute. This would also help to promote the whole of Montenegro, not just Herceg Novi. Of course, some of our investment would have to cover debt reprograming and pay for any other obligations arising from court decisions made in respect of the Institute. Igalo has resources that we are interested in regarding the development of health resort tourism. Above all, the Institute has well trained and experienced staff in the area in which we are involved. I believe that they represent the company’s most significant capital. With a combination of planned investment and the Vichy brand name, the Institute would be soon be recognized in the international market. What is your relation towards the employees at the Institute? Let me be very direct – we want to keep all employees that want to work. Any employees who wished to leave the Institute for early retirement would be offered severance payments according to legal legislation and regulations in Montenegro. As the project develops we aim to create between 180 and 200 new jobs. We have also planned to allocate a considerable sum for training and for any additional education that may be required for employees. We have not had any problems so far with
our employees in any other projects; we do not, therefore, see why should it be any different in Montenegro. Do you have positive expectations? Of course. We hope that the Government of Montenegro will see Vichy as a strategic partner. We have carefully prepared and secured money for this investment. We have a lot of work ahead of us to turn the Dr Simo Milošević Institute into a world recognized medical and spa center. We will need lot of patience and trust. But if we don’t believe we can do this, we would not participate in the bid to tender. As a potential partner, how do you view Montenegro? We are even very confident in Montenegro’s potential, which, even as a small country, provides numerous opportunities to foreign investors. I have to admit that the Montenegrin Investment Promotion Agency (MIPA) is doing an excellent job, and that its persistence and compliance has had a great influence on us when considering Montenegro as a possible location in which to investment; we were at the same time considering other destinations such as Morocco, Qatar and Brazil. We have also had really good cooperation from the local authorities in Herceg Novi, as well as from state institutions and from the Government of Montenegro. Even the most beautiful diamond will stay hidden in the mud if there is no adequate business environment. The environment for foreign investment in Montenegro, along with the willingness of leading institutions to talk with investors like us, to participate in our plans, and to take on additional liabilities has made us realize that we have been taken seriously; we expect the promises that we have been made to be realized.
and is therefore burdened by some fairly significant court processes. However, as I already said, the company’s most significant is its employees, and we ill do our best to ensure that they are satisfied with their new work conditions. They represent the heart of the company, and without them, the potential of the Institute is not the same. We have long term plans. We believe that we can contribute to completely transforming the Institute, and to promoting not just Herceg Novi, but also the whole of Montenegro. One of our plans is to open a Vichy Academy in Montenegro; this would enable us to educate young people from the whole region and from even further afield. Last time we talked about Vichy resorts all around the world. Has anything changed? During the last couple of years, Vichy has grown steadily. Our recognized brand and quality standards are in demand at many of the largest developments and tourist centers in the world. We have already opened with two projects in Morocco: in Marrakech we have a 5-star spa-hotel resort and in Fes we have a 4-star medical and spa-center, Vichy Thermalia. We are also in the process of preparing a project to open one more 5-star spa-hotel resort in Casablanca. Additionally we have spa and medical centers in Qatar and on Mauritius. Both are 5-star. In France we have just opened a 4-star hotel in Montpelier. In addition to all of the above, we are in negotiating new projects in Brazil and China. We expect to add Montenegro to the list of exotic countries in which we work and hope that the Institute will become part of the Vichy family. ■
Do you believe that Dr Simo Milošević Institute has huge potential and a bright future? Yes exactly. The Dr Simo Miloševi Institute has remarkable potential; this is the right time to free up that potential and to benefit from it. The company does have a burden of debt from earlier work,
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