Shareholders up Kingsbury owner’s borrowing limits

Nearly 68% of shareholders of Hotel Services (Ceylon) PLC last week adopted two resolutions enabling the directors of the company to borrow Rs.231.6 million in excess of 50% of the company’s assets as at March 31, 2011 and also to borrow a further Rs.1.53 billion from local or foreign funding institutions to settle loans obtained for refurbishing the Kingsbury Hotel (previously Hotel Ceylon Continental) to settle loans obtained for refurbishing the property and meeting working capital requirements.

The Kingsbury is owned by Hayleys Leisure.

The resolutions authorized the directors to provide security acceptable to lenders against further borrowings.

Analysts said that cheaper credit was available and the directors wanted to settle existing loans at higher rates by taking advantage of cheaper borrowings.

The extraordinary general meeting of the company held last Thursday was well attended and the company’s Chairman, Mr. A.M. Pandithage, indicated that their studies suggest that the Kingsbury would run profitably two years hence.

Hotel Services last paid a dividend in 2009.

Although the company’s refurbishing is not yet complete and all 229 rooms of the hotel, up from the previous 180 rooms, have not yet been commissioned, it is now partly operational with about 50 rooms now being sold.

The owners expect the Kingsbury to be "one of the finest hotels in Colombo" and have estimated that the total refurbishment cost would be around Rs.1.8 billion.

Some of the property’s six restaurants have already been commissioned and the hotel is also selling banqueting facilities for weddings and corporate events.

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