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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » GHLL - Sri Lanka's Galadari Hotel to convert debt into equity

GHLL - Sri Lanka's Galadari Hotel to convert debt into equity

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Monster

Monster
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
http://www.lbo.lk/fullstory.php?nid=1007866013

http://www.cse.lk/cmt/upload_cse_announcements/8471305791940_.pdf

According to the announcement, GHLL is going to convert the debt into equity. The proposed conversion will be done by the way of private placement. How would this effect the share price? Price may depreciate or appreciate based on the price of conversion and number of shares to be issued. I assume, in long run GHLL will do better.

Nearly 5.75 billion rupees debt to be converted into equity.

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Hey I did the calculation, if they convert their debt into equity.. Each share should be worth Rs 25/=

raa


Manager - Equity Analytics
Manager - Equity Analytics
I don't understand how this will work. Are they issuing new shares by converting debt?

So will the share price get readjusted down to 25rs when this happens? Should I be shorting the share now then? Sad

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Debt is 6 billion and at Rs 30/= conversion price there will be 200 mn new shares issued. Current issued capital is 180mn share. Share price will be dialuted by more than 50% hence price should be around Rs 15/= but on revaluation of land and building GHLL is worth about Rs 10bn. And accordingly price should be 10bn/380mn shares. This makes share worth approximately Rs 25/=

Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics
@Quibi - Have you assumed conversion at price of Rs 30?

The announcement mentions that there will be a valuation of GHLL's shares for the purpose of determining conversion price.

raa


Manager - Equity Analytics
Manager - Equity Analytics
I understood how you got to 15.4rs. When you calculate the 10bn/380mn, that is the NAV? (considering the debt doesn't have to be subtracted).

My average for GHLL is 34. Oh nooo..... Sad

Monster

Monster
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Quibit wrote:Debt is 6 billion and at Rs 30/= conversion price there will be 200 mn new shares issued. Current issued capital is 180mn share. Share price will be dialuted by more than 50% hence price should be around Rs 15/= but on revaluation of land and building GHLL is worth about Rs 10bn. And accordingly price should be 10bn/380mn shares. This makes share worth approximately Rs 25/=
Oops, shares expected to be issued is more than the current issued shares. I think I have disposed my shares on time. Very Happy

Considering YoY growth GHLL was a good share to hold. Still It will be better to re-enter once it's diluted after the debt conversion into shares.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Thats a bad valuation Wink
I just happened to enter GHLL few days ago..

I saw they've made profits this year and converting debts to equity seems a good choice of writing off the debt from books.. coming qtrs, there might be a chance of a expected high growth..

Backstage

Backstage
Moderator
Moderator
My assumption that GHLL would benefit from CHOGM was wrong. But is there anything other than Christmas pudding that's cooking in the Galadari Kitchen ?

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