Oct 05, 2011 (LBO) - Sri Lanka's heavily indebted Galadari Hotels said its board of directors has approved a price of 15.26 rupees a share to convert debt to equity.
The hotel plans to convert into shares 5.75 billion rupees (52 million US dollars) owed to the parent firm Galadari Brothers Company and 583 million rupees owed to the government's National Insurance Trust Fund.
The conversion price was based on valuations by NDB Investment Bank and Pricewaterhousecoopers and matches that given to the Treasury by the chief valuer, as a creditor, a stock exchange filing said.
The hotel is seeking approvals from the two creditors, the markets regulator, Securities and Exchange Commission and the central bank's exchange control department.
In May 2011 Galadari Hotels said it plans to convert debt into equity in an effort to take advantage of the tourism boom after the end of the island's 30-year ethnic war in 2009.
The proposed debt to equity conversion by Galadari Hotels (Lanka) will be by way of a private placement of shares subject to regulatory and shareholder approval.
The hotels had faced difficulties in repaying the debt because of the lengthy tourism slump experienced by the island owing to the war.
The National Insurance Trust Fund loan was given by the Strike, Riot, Civil Commotion, and Terrorism Fund to the Galadari Hotels (Lanka) for repairs after the hotel suffered damages in a Tamil Tiger bomb in October 1997 that forced it to close for several months.
source - www.lbo.lk
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