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Indian Casino Mogul Makes A Play For Hilton Colombo

Mar 19, 2011 3:28:04 PM - thesundayleader.lk

By Faraz Shauketaly

The Letter from Delta Corp

Evidence has emerged that the Indian Casino operator Delta Corp Limited wrote to Sri Lanka’s Treasury Secretary in October 2010 expressing a desire to purchase controlling interest in the Colombo Hilton’s owning company Hotel Developers Lanka PLC. Not mentioning HDL specifically and referring to the “Hilton Hotel Colombo”, the Chairman of Delta Corp Limited, Jaydev M. Mody, wrote with little ambiguity of his company’s interest in the purchase of the majority shares and specifically stated that, “We want the government to maintain its shares”, referring to the 8.84% of shares that was issued to the Treasury Secretary in the aftermath of a loan made to HDL by the Treasury Secretary in the early 1990’s. The Delta casino team then met with Dr. P. B. Jayasundera to make their play for arguably the most expensive piece of land in Sri Lanka.

Unsolicited Offer By Delta Corp
Last week the Chairman of HDL, businessman T. Nadesan, hotly denied any move to sell the Hilton Colombo’s owning company, HDL. This week Nadesan confirmed, “Yes, Delta Corp did meet with Treasury Secretary Jayasundera as investors. At the meeting when it became clear that they were making a bid for the Colombo Hilton Dr. Jayasundera politely declined. Anyone can make an unsolicited offer – it means nothing unless the owners authorise discussions. In this case Cornel Perera who ceased to be Chairman in 1995, was not authorised by the owners to hold any such discussions with anyone. I can re-confirm that the Hilton Colombo is categorically not for sale.”
Delta Corp Limited urged the government to “take an interest to settle this long standing conflict” stating that they were “able to motivate Cornel & Company Ltd., to come to one table for a negotiated settlement”. Our attempts to reach Jaydev Mody resulted in a statement from Delta Corp’s Business Development Manager Sunil Nair in Bombay, who said he would revert back after checking with his Chairman, Jaydev Mody.
Speculation has intensified as to the new actions of the government in terms of taking over the land upon which the Colombo Hilton Hotel stands.  Originally given on a lease to Cornel & Company at a value of Rs. 136 million, the prime seven acre plot was sub-leased by Cornel & Co., to HDL at a value of Rs 250 million for which Cornel & Co., were given 56.14% shares. To facilitate the issuance of a sovereign guarantee in favour of the Japanese contractors, Cornel & Co., pledged their shares to the Treasury Secretary. Cornel Perera has instituted legal action for the recovery of those shares which he maintains must be returned to his company after the payment was made to the Japanese. The matter is still pending in court, along with other legal cases, which one Director of HDL described as “an avalanche” of litigation.
The government’s action in taking control of the prime piece of land in the city, is bound to be the centre piece of new litigation in which other shareholders will seek refuge and comfort in the indenture lease granted in 1983 which precluded any determination being made to the lease until such time as the Japanese contractors – who still hold a substantial 27.52% of the shares – are paid in full. Cornel Perera disputes the right of the government to transfer shares pledged by him, in a separate case. Yet another case which will gain currency and legitimacy with the publication of HDL’s annual returns after a lapse of 21 years, is the petition seeking the winding up of HDL on the grounds that it has more liabilities than assets.