Sept 01, 2010 (LBO) - A Sri Lankan hotel which was spun off from a hotel group said it was raising cash by issuing new shares and was also giving away a series of equity warrants convertible in several tranches.
Hotel Reefcomber, which owns Amaya Reef, a hotel in the Southwest coast of Sri Lanka said in a stock exchange filing that it will consolidate 10 shares to one. It has 157.3 million shares in issue.
The Amaya leisure group sold out of the hotel recently saying it will use the proceeds in a new hotel it was building.
The firm will then sell a rights issue of two new shares for every existing one. The firm will sell 31.4 million shares at 25 rupees to raise 786 million rupees to refurbish the hotel.
The rights will come with a series of equity warrants. An equity warrant gives the holder the right to buy a new share at a specified price in the future. If the market price of the share is lower than the exercised price, the warrant has no value and will expire.
Any warrants that are exercised will dilute the value of the original share.
Reefcomber is giving away four warrants with each new rights issue: a warrant with each right to be exercised in 2011 and 2012 at 30 rupees each.
Two more warrants will be given away to be exercised at 40 rupees each in 2015.
source - www.lbo.lk
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