Kingsbury owner to retire Rs. 660 m debt via rights issue

Plush five star The Kingsbury’s owner Hotel Services (Ceylon) PLC is going for a 3 for 8 rights issue to raise Rs. 660 million.
Offered at Rs. 10 per share the rights will entail issuance of 66 million new shares.
Funds raised will be used to retire debt thereby strengthen the balance sheet. Long-term borrowings as at 31 March 2013 was Rs. 1.2 billion, up from Rs. 400 million a year earlier and short term borrowings were Rs. 634 million, up from Rs. 28.4 million in FY12 whilst there was also a short-term loan of Rs. 775 million from related companies.

The rights issue is subject to regulatory and shareholder approval.
Hayleys PLC holds a 38% stake and subsidiary Carbotels Ltd., a further 13%. Other major shareholders include EPF (10.5%) and Bank of Ceylon (4.4%).
In the FY13, with an investment of Rs. 2.4 billion, the company completed the upgrading of the former Ceylon Continental Hotel  and rebranded the property as the landmark of luxury in Colombo; The Kingsbury.
The property which was closed for upgrading in February 2012 was planned to be operational by
October 2012 but due to the change of scope of the upgrading program for the betterment of the hotel, the opening was re-scheduled to mid December 2012. The opening went through a gradual phase from
January to March 2013.
Due to the closure, the company in FY13 suffered a net loss of Rs. 449 million up from Rs.186 million.
The reduction in revenues experienced year on year was Rs.363 million due to the closure of the hotel. The increase in administrative expenses by 41% to Rs.365 million in FY13 from Rs. 259 million in FY12 was mainly attributed to the investments the company made on its human resources.
The company said with the appointment of a qualified and experienced senior team with extensive international exposure to manage the hotel, the Kingsbury under their leadership is poised to reach unparalleled levels of performance during the next financial year.