Wow .. Maldives resort of MAL will managed by Hilton - worldwide hotel chain !!!

What a imprasive news... MAL has informed their shareholders the details of the proposed hotel project that they're raising funds through Right Issue!

A subsidiry of MAL - Malwatte Hotels and Resorts (Pvt) Ltd (MHRL) - is to develop a resort island in Maldives .... a 4 star resort property comprising 70 bungalows (initially) which costs USD 26 millions.

The most exciting fact is the resort to be built will be managed by HILTON - world wide hotel chain and the MOU is already signed on 28/03/2011.

Investment of USD 26 millions in MHRL will be on 50:50 Debt:Equity basis, while the entirety of debt protion (USD 13 millions) would be a loan by MAL. Out of equity USD 8 millions (62%) by MAL, Aprox. 10% (USD 1.3 millions) to the owner of leasehold right of the island. The balance 28% will be raised via a Private Placement in future.

the project expected to commence in September 2011 and expected to be commence oprtations by September 2013.

Impressive, very impressive ... but MAL hasn't market the concept (see how REEF market their hotel projects)

For another 2 years (that is 1, 2, 3, 4, 5, 6, 7, 8 quarters) this will be a burden to the company and then after that they will also have to make profits to go past the break even point for the debts and the cost. After then only they can earn money from this project.
And then after several years hope the island will not be covered with salt water from the sea level rising.

I think its good move by MAL to open a hotel in the Maldives. Maldives is a world class tourist hot spot which has beautiful beaches and some of the best coral reefs in Asia. Hopefully by the end of the 2013 the world economy will be in a better shape and European debit crisis would have been resolved. If they have an innovative concept for the hotel I think they can attract a lot of tourists. Maldives is a location which has lot of innovative hotels. The year 2013 would be one of the best times to open and start operations in hotel.

Its really good to see that indigenous companies exploring opportunities overseas.Maldives tourism sector is big when we compared with ours, their beaches are very popular among tourists. But it will take some time to get establish due to competition. JKH also runs some hotels there but not profitable it seems. best wishes MAL

I thought they are going to build a hotel in a plantation area. You have free land and environment there.

Now they have to pay for the land also. Somehow, a resort in Male will be wonderful.

I hope this is not a bait before the rights issue.
Hope they know the so called threat from rising sea water.

MoneyLover wrote:What a imprasive news... MAL has informed their shareholders the details of the proposed hotel project that they're raising funds through Right Issue!

A subsidiry of MAL - Malwatte Hotels and Resorts (Pvt) Ltd (MHRL) - is to develop a resort island in Maldives .... a 4 star resort property comprising 70 bungalows (initially) which costs USD 26 millions.

The most exciting fact is the resort to be built will be managed by HILTON - world wide hotel chain and the MOU is already signed on 28/03/2011.

Investment of USD 26 millions in MHRL will be on 50:50 Debt:Equity basis, while the entirety of debt protion (USD 13 millions) would be a loan by MAL. Out of equity USD 8 millions (62%) by MAL, Aprox. 10% (USD 1.3 millions) to the owner of leasehold right of the island. The balance 28% will be raised via a Private Placement in future.

the project expected to commence in September 2011 and expected to be commence oprtations by September 2013.

Impressive, very impressive ... but MAL hasn't market the concept (see how REEF market their hotel projects)

According to the information distributed among shareholders, they already formed the company Malwatte Hotels and Resorts (Pvt) Ltd (MHRL) and signed MOU with HILTON - world wide hotel chain in March 2011.

However no corporate disclosure made by the company so far to CSE, I gone through the Annual Report (2010) published in May 2011 http://www.cse.lk/cmt/upload_report_file/722_1307937048.pdf, but neither Chairman nor Directors has shown any interest or indication of this diversification in to Leisure Sector either in Sri Lanka or Maldives.

However, their AGM has been scheduled on 15th July 2011 (Tomorrow) at 10.30am at Sri Lanka Foundation Institute, Colombo 07. We can expect some thing special (more details about the project) there.

If somebody here participating it ...... please update!

only one star hotel was in Maldives city island. that was Hilton. But Six month ago they sold it. now running under new name called Traders Hotel.

01. according to the Maldives tourism industry, lot of repeaters are visiting Maldives. more than 50% of the total guest would be Chines.

02. JKH also disposed one of their hotel investment from Maldives. JKH has reasonable experience for running hotel. but they also can't run their hotel in Maldives. they don't make reasonable profit from Maldives investment.

03. next thing is Maldives government increased their USD $ from Mrf12.85 to Mrf15.42. this was 20%.

04. in Maldives anybody can see doller crisis.

05. in Maldives tourism industry, all important employees are from outside of Maldives.now foreign employees are suffering from doller crisis. without doller nobody can send home money. lot of foreign employees are leaving home because of this. without foreign employees nobody can run hotel even one day.

06. important thing is no one believe Maldives government. any important party do not deal Maldives for long term things.

my question what will happen to MAL investment in Maldives.

Can anyone knows of the relationship between Wayamba Plantations (Pvt) Ltd (the management company of MAL) and Lanka Mountcastle (Pvt) Ltd ??

I smell some thing ...

MoneyLover wrote:Can anyone knows of the relationship between Wayamba Plantations (Pvt) Ltd (the management company of MAL) and Lanka Mountcastle (Pvt) Ltd ??

I smell some thing ...

Lanka Mountcastle is the major Non Voting shareholder with 86.4% stake having 1,987,300 shares of total Non Voting shares.But their name is not in the @) largest Voting Share list.

Rajaraam wrote:

MoneyLover wrote:Can anyone knows of the relationship between Wayamba Plantations (Pvt) Ltd (the management company of MAL) and Lanka Mountcastle (Pvt) Ltd ??

I smell some thing ...

Lanka Mountcastle is the major Non Voting shareholder with 86.4% stake having 1,987,300 shares of total Non Voting shares.But their name is not in the @) largest Voting Share list.

Is it a related party of Wayamba Plantations (Pvt) Ltd, I mean GROUP companies with same ownership??

MoneyLover wrote:

MoneyLover wrote:What a imprasive news... MAL has informed their shareholders the details of the proposed hotel project that they're raising funds through Right Issue!

A subsidiry of MAL - Malwatte Hotels and Resorts (Pvt) Ltd (MHRL) - is to develop a resort island in Maldives .... a 4 star resort property comprising 70 bungalows (initially) which costs USD 26 millions.

The most exciting fact is the resort to be built will be managed by HILTON - world wide hotel chain and the MOU is already signed on 28/03/2011.

Investment of USD 26 millions in MHRL will be on 50:50 Debt:Equity basis, while the entirety of debt protion (USD 13 millions) would be a loan by MAL. Out of equity USD 8 millions (62%) by MAL, Aprox. 10% (USD 1.3 millions) to the owner of leasehold right of the island. The balance 28% will be raised via a Private Placement in future.

the project expected to commence in September 2011 and expected to be commence oprtations by September 2013.

Impressive, very impressive ... but MAL hasn't market the concept (see how REEF market their hotel projects)

According to the information distributed among shareholders, they already formed the company Malwatte Hotels and Resorts (Pvt) Ltd (MHRL) and signed MOU with HILTON - world wide hotel chain in March 2011.

However no corporate disclosure made by the company so far to CSE, I gone through the Annual Report (2010) published in May 2011 http://www.cse.lk/cmt/upload_report_file/722_1307937048.pdf, but neither Chairman nor Directors has shown any interest or indication of this diversification in to Leisure Sector either in Sri Lanka or Maldives.

However, their AGM has been scheduled on 15th July 2011 (Tomorrow) at 10.30am at Sri Lanka Foundation Institute, Colombo 07. We can expect some thing special (more details about the project) there.

If somebody here participating it ...... please update!

Rajaraam wrote:

MoneyLover wrote:Can anyone knows of the relationship between Wayamba Plantations (Pvt) Ltd (the management company of MAL) and Lanka Mountcastle (Pvt) Ltd ??

I smell some thing ...

Lanka Mountcastle is the major Non Voting shareholder with 86.4% stake having 1,987,300 shares of total Non Voting shares.But their name is not in the @) largest Voting Share list.

As most of you know, I'm a fan of plantation stocks/sector and obviously a fan of MAL, purely on the ground that MAL is the most undervalued stock in the plantation sector.
When MAL first announced their intention to diversify in to Leisure Sector, I also assumed that MAL going to convert plantation bungalows in Badulla in to hotels/resorts. Now, they have declared that [by noticed to the shareholders, but not as a corporate disclosure to CSE].

I have few question in my mind;
1. Why MAL suddenly decided to go for USD 26 million Leisure Investment in Maldives.
As far as I know, MAL is managed by "Bogtstra Family", a well respected planters, but none of their businesses are in Leisure/tourism.

2. How MAL could approach "HILTON" to manage their proposed resort in Maldives.
I don't think "HILTON" will interest manage a poor profile hotel developed by Sri Lankan Planters. So, how "HILTON" was approached by MAL without any experience in the sector and why "HILTON" went for a MOU with a company like MAL.

3. Why MAL wanted to offer MAL.N to shares to shareholders of MAL.X (May be the samething that Moneylover* think of)
Usually Voting shares (i.e. MAL.N) are not offered to shareholders of Non-Voting MAL.X as rights (may be opposite side) as it dilutes voting rights of the owers. But, MAL has generously did that.

I guess there must be an invisible hand behind this decision of MAL, details are yet to disclose. Hopefully shareholders will question for the directors at the AGM. Unfortunately I won't be able to attend AGM (tomorrow), but hope details will be update by some members participating it.


*@Moneylover - Sorry I have no idea whether Wayamba Plantations (Pvt) Ltd (WPPL) and Lanka Mountcastle (Pvt) Ltd (LMPL) are with the same ownership. However there must be some sort of close relationship between them otherwise LMPL would not invest in 84.6% non-voting shares.
When I checked details of LMPL on the web, I noticed they are basically in the Apparel Sector and Mr. Zahid Hussein A. I. Jafferjee is the Owner/Managing Director.
http://www.lankamountcastle.net/services.htm
http://www.lankamountcastle.net/associates.htm

My interest on MAL is fading now with this Maldive news.
I expected to see they build something beautiful here in hill country.

For us , find a land and allocate lot of cash for it is a prohibitive factor in leisure business.

As aga.sanjeewa said business confidence in Maldives is going downwards.

aga.sanjeewa wrote,

. JKH also disposed one of their hotel investment from Maldives. JKH has reasonable experience for running hotel. but they also can't run their hotel in Maldives. they don't make reasonable profit from Maldives investment.

This is a misunderstanding brother. True. Operation of One Hotel in Maldives discontinued in 2010 by KHL due to location specific problems as per their announcement if I am correct
However Major potion of the group net profit of Keels Hotel(KHL) is coming from their Maldivian properties.As per Financial Reports for the year 2010/2011 contributions towards the Net Profit of the group from Maldivian Hotels and Sri Lankan Hotels are;

Sri Lankan Hotels 2009/2010 (Rs. 22.6 mn)Loss
2010/2011 Rs. 135.1 mn

Maldivian Hotels 2009/2010 Rs. 527.2 mn
2009/2010 Rs. 618.4 mn

Aitken Spence Hotel story also similar. They also make good profit from their Maldivian Hotels.According to their FR 2010/2011 Main contribution for their south Asian sector net profit has come from Maldivian properties.(page 61) In fact compared to Rs. 640.9 net profit of last year from Sri Lanka Hotels They have earned a net profit of Rs.755.8 from the South Asian sector(with major contribution from Maldives)

Therefore I believe If a decision is taken by MAL Mangement to enter in to this industry, Maldives is a better location and it will help the company to enhance the shareholders wealth in the future.

factFINDER wrote:
3. Why MAL wanted to offer MAL.N to shares to shareholders of MAL.X (May be the samething that Moneylover* think of)
Usually Voting shares (i.e. MAL.N) are not offered to shareholders of Non-Voting MAL.X as rights (may be opposite side) as it dilutes voting rights of the owers. But, MAL has generously did that.

I guess there must be an invisible hand behind this decision of MAL, details are yet to disclose. Hopefully shareholders will question for the directors at the AGM. Unfortunately I won't be able to attend AGM (tomorrow), but hope details will be update by some members participating it.


*@Moneylover - Sorry I have no idea whether Wayamba Plantations (Pvt) Ltd (WPPL) and Lanka Mountcastle (Pvt) Ltd (LMPL) are with the same ownership. However there must be some sort of close relationship between them otherwise LMPL would not invest in 84.6% non-voting shares.
When I checked details of LMPL on the web, I noticed they are basically in the Apparel Sector and Mr. Zahid Hussein A. I. Jafferjee is the Owner/Managing Director.
http://www.lankamountcastle.net/services.htm
http://www.lankamountcastle.net/associates.htm

I guess the invisible hand is Lanka Mountcastle (Pvt) Ltd (LMPL) led by Mr. Zahid Hussein A. I. Jafferjee!

Look at his business portfolio, most of them are joint ventures with reputed business partners in the western countries... may be he has connection with the Maldives Island's original leaseholder and HILTON hotel chain. I heard that Sri Lankan hotels aquired by LOLC Group resently, also going to managed by HILTON's resort management arm.

With this offering of Voting shares to Lanka Mountcastle (Pvt) Ltd (LMPL) at LKR 6/75 each, LMPL will become one of the largest voting shareholders as well and probly secure a Board seat as well.

Let's wait and see .....

Btw.... has any one attended the AGM today? ... if so please update us.

The AGM was short and sweet. There seemed to be divided opinion on going forward at that moment. Therefore the meeting was called to an end and was rescheduled for the 29th of August. Hoping the market would be at a better position.
I am not quite Sure what Mr. Jafferjee's role is, but whatever his role maybe i am sure it is a very well calculated investment. With the money and reputation the Jafferjee Family have they are in a very strong position to invest or take over many companies. Therefore simply because of his involvement i feel it maybe worthwhile to keep an eye on MAL as it has always been a good performer and now with this diversification plan, again with one of the most well reputed hotel chains in the world, Hilton, who have a HUGE and Constantly flowing customer base, MAL might actually become a much more profitable and well sought after share.