The Securities and Exchange Commission (SEC) has directed Kalpitiya Beach Resort Plc to convene an Extraordinary General Meeting to inform shareholders as to the current position of the company.
The directive, which requires the company to convene an EGM to appraise company shareholders of the true financial position of the company, was triggered by what was termed an “inordinate delay” in the construction of a hotel in Kalpitiya out of the funds raised at an Initial Public Offering (IPO) in November 2011.
The IPO had raised Rs. 283.5 million in funding which a prospectus issued by Kalpitiya Beach Resort had stated was to be utilised towards the construction of a resort hotel – Citrus Kalpitiya – subsequent to relevant deductions in respect of the cost of the IPO itself.
In a previous disclosure, the company had also stated the construction of the resort would commence from December 2011. Construction on the project at the time was estimated at between 24-30 months with commercial operations commencing in early 2015.
The directive from the SEC expressed “grave concern” over the company’s failure to complete construction within the timeframe specified in its prospectus.
Subsequent to appraising shareholders of the company’s financial position, the SEC directed Kalpitiya Resorts to pass a resolution specifying an alternative course of action with regard to funds collected through the IPO on or before 10 May 2015.
The company was further directed to issue a report prepared by a company auditor or an accounting firm providing adequate information to its shareholders in order to allow for an informed decision to be taken on the company’s future direction.