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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Bansei Hikkaduwa largest shareholder divests interest

Bansei Hikkaduwa largest shareholder divests interest

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Melissa Pereira


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
A change has taken place in the shareholding of Bansei Royal Resorts Hikkaduwa PLC, with largest shareholder Channa de Silva divesting most of his shares. De Silva divested 5.77 million shares representing 10 percent of the listed shares for Rs.5.80 million at Rs.10.80 per share on August 10, and a further 31 percent represented by 16.66 million shares for Rs.183.21 million at Rs.11 per share. 

A company named Bansei Holdings Co. Ltd. bought the 10 percent last week, while Hikkaduwa Hotel Holdings (Pvt) Ltd bought the 31 percent this week without triggering a mandatory offer. A purchase of over 30 percent of shares should have generally triggered the Takeover and Mergers Code, requiring the new owner of the shares to notify the trading floor and submit a mandatory offer to all other shareholders for the purchase of the remaining shares. 

However, if the share purchase is a transfer, where the ultimate ownership in the shares is not changed, the code will not be triggered. Further, if a shareholder who owns between 30-50 percent of the shares purchases over 2 percent, the code is triggered as well. Therefore, if Bansei Holdings is related to the second largest shareholder Bansei Securities Co. Ltd. of Japan, a mandatory offer should be forwarded as well. According to the latest interim statements ended June 30 (1Q16), de Silva owned 51 percent of the shares, while Bansei Securities owned 39 percent. 

Therefore, the new shareholder structure shows Bansei Securities owning 39 percent of the shares, Bansei Holdings owning 10 percent, Hikkaduwa Hotel Holdings owning 31 percent and de Silva owning 10 percent. A foreign entity cannot directly hold 50 percent of the shares in the company due to the hotel land being on a freehold basis, and the land restrictions on foreigners placed by the previous regime. 

Channa de Silva was not available for comment.  
Meanwhile, the hotel has started to move towards profitability largely owing to the new management by Jetwing Hotels, which renamed Bansei Royal Resorts Hikkaduwa to Bansei by Hotel J and repositioned it to a no-frills lean luxury hotel with room prices based on market rates. The net loss for 1Q16 halved to Rs.3.90 million compared to a net loss of Rs.7.56 million in 1Q15, with revenue nearly doubling to Rs.8.79 million from Rs.4.82 million and cost of sales falling to Rs.642,000 from Rs.982,000 in the same period. 

Prior to Jetwing taking over the management in January, Amaya Leisure PLC had managed the property. Formerly known as Coral Rock Hotel Ltd, the company was re-registered in 2010 and De Silva, along with Royal Ceramics PLC Managing Director Nimal Perera and former Bank of Ceylon Chairman Gamini Wickramasinghe owned the company. It was renamed to Bansei Royal Resorts Hikkaduwa in 2014, following the entry of the Japanese company, which listed the entity in March 2014.
Courtesy: Daily Mirror 21 August 2015

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