The government will discuss the proposal by the Ministry of Finance to increase the share capital of the Thermal hotel by 300 million CZK

Prague – The registered capital of the Karlovy Vary hotel Thermal is set to increase by 300 million crowns to 1.1 billion crowns. The proposal from the Ministry of Finance will be discussed by the government on Monday, as indicated by information on the government’s official website. The reason for the increase, according to a previous statement from the Ministry of Finance, is the drop in revenues due to the pandemic, rising construction costs, and unexpected expenses related to the hotel's modernization, such as the need for the disposal of hazardous substances or the necessity of stabilizing emergency metal structures. The increase in registered capital will occur through the issuance of new shares. The Ministry of Finance exercises shareholder rights of the state in the hotel.

"The purpose of the proposed capital strengthening of Thermal is primarily to ensure that the company can carry out the intended investments and to prevent the risk of having to return the provided investment funds (grants and loans from the State Fund for Environmental Protection), as by mid-2021, the full depletion of funds from the most recent contribution to the company's registered capital is expected," states the document.

Finance Minister Alena Schillerová (for ANO) previously pointed out that in just the last three years, construction costs have surged by nearly a third, and the premises, which serve as the cultural, congress, and spa center of the Karlovy Vary region, have been turned into a ghost house by the pandemic. "The actual condition of the structures was revealed to be in much worse shape than expected at the last increase in registered capital in 2016," she said. According to her, given the investment plan until 2025 and taking into account the risk of a reduction in grants for reducing the energy demand of the building, the increase in registered capital is the only possible step.

Hotel Thermal was built in the second half of the 1970s based on the architectural design of Věra and Vladimír Machonin for the Karlovy Vary International Film Festival. The reconstruction, which began last year, is estimated to cost about 580 million, with the state providing 300 million as a contribution to the hotel’s registered capital. An additional 148 million was obtained for energy savings from the State Fund for Environmental Protection. The remainder will be covered by a loan. The hotel reopened on Friday, June 25, after its reconstruction. The modernization of the hotel will continue in the coming years.