No funds have been earmarked for investments in the Maldives, where the group is one of the biggest resort operators, according to a company note to shareholders.
The company is making a rights issue of one new ordinary share for every four ordinary shares at a price of 260.00 rupees to fund expansion as the tourist industry recovers from the effects of war.
The note to shareholders said the company intends to fully use the funds raised by December 31, 2012.
It said about 35 percent of the funds raised - about 875 million rupees - has been earmarked to build new hotels in Sri Lanka's north and east.
These were areas worst affected by the 30-year ethnic war which ended in May 2009, resulting in an immediate increase in tourist arrivals.
The company has a 100-acre prime beach property in Nilaveli, on the east coast which is considered to have some of the island's best beaches.
It also plans to build a hotel in the northern Jaffna region.
The firm said about a quarter of the funds raised through the rights issue - about 625 million rupees - will go to build and develop a boutique resort on the south-west coast in "partnership with a reputed international resort and spa operator."
This refers to a planned project with Six Senses Spas, an international spa chain, in Beruwala, a prime beach resort where Aitken Spence already has two hotels, Heritance and Neptune.
The project had been planned several years ago but was shelved because of the war and now revived.
About 15 percent of the funds to be raised from the rights issue - or around 375 million rupees - will be spent on converting Neptune Hotel in Beruwela to a 64-roomed specialized Ayurveda and wellness resort.
The balance 625 million rupees will go for investment in hotel projects in Sri Lanka and India, the note to shareholders said.
The company, a subsidiary of the Aitken Spence group, owns or manages a chain of hotels in Sri Lanka, the Maldive Islands, India and Oman.
Profits from its Maldivian resorts helped compensate for lower earnings or losses from hotels in Sri Lanka during the war years.
Aitken Spence who holds 71.21 percent of the hotel firm has indicated they will take up their rights entirely and underwrite the balance shares.
The company has called an extraordinary general meeting on March 30 to seek shareholder approval for the rights issue.
source - www.lbo.lk
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