Furkhan to tolerate intruders ‘at a price’
The battle for hotels continues as Confifi Chairman
Tony Furkhan is believed to be selling his nearly 40
percent stake in the company ‘at a price’ that
Ishara Nanayakka-Ajit Devasurendra led LOLC-Browns
Joint Venture Company may not want to pay.
In the meantime, the presence of a ‘third party’ who
has reportedly entered the scene backing Furkhan
seems to have given the muscle to the founding
chairman of the group to bargain terms with the LOLC
who is believed to be rushed into the deal without
bailing out the biggest shareholder of the company.
Last week, LOLC-Browns JV, LOLC Securities bought
43 percent of Confifi Hotels Holdings PLC (PALM) at
Rs.210 for a total consideration of nearly Rs.660
million and in a separate deal it acquired 20
percent of Riverina Hotels PLC, an associate company
of Confifi Holdings for approximately Rs.286
Confifi Hotel Holdings owns 24.06 percent of
Riverina Hotels and 21.8 percent of Eden Hotel
Lanka, both listed firms. The assets of Riverina
includes 24.4 percent of Eden Hotel Lanka PLC and
3.6 percent of PALM.
According to CT Capital chief executive, Channa
Amaratunga, this ‘takeover attempt is more about
location and potential, rather than current
Analysts point out that although Confifi hotels
need substantial upgrading, all the three hotels
have fairly large land extent in the
Beruwela-Bentota coastline which is known as the
‘Golden mile’. PALM has nearly 8 acre land while
Riverina is believed to have a land extent of
approximately 10 acres. Eden Hotel also has a 5 acre
land extent along the ‘Golden Mile’.
“Significant investment will be required in
upgrading properties to command higher REVPARs
(Revenue per Available Room) and to generate
adequate ROEs (Return on Equity)” Amaratunga added.
In terms of number of rooms, Eden Hotel has 158
while Riverina has a room strength of 192. Club Palm
Garden (PALM) which underwent a partly refurbishment
last year has a room capacity of 136.
However, there are doubts as to whether the two
parties will come to an agreement over the ownership
of the Confifi Group amicably as it is believed that
the management contracts of the Eden Hotel and
Riverina is with the Confifi Management Services
which owns a 30% company controlled by Tony Furkhan.
“As well as the asset ownership, LOLC needs to
buy the managing company that manages the Confifi
Group Hotels”, an analyst, on the ground of
anonymity, told The Nation Economist.
In an earlier deal in which John Keells Holdings
tried to acquire Confifi Hotels, JKH resorted to
cancel the management agreements the three hotels
had with Confifi Management Services.
Confifi shares were seen rising 46 percent ot Rs.318
on Wednesday as the buyers expected a battle for the
control of the company.
According to a research report by Asia Securities
issued this month, Confifi Hotel Holdings has book
value per share of Rs.162.15. Even though hotels is
capital intensive business for the December 2009
quarter, the company has spent only Rs.17 million as
capital expenditure and according to analysts, the
new buyer will have to engage in refurbishment work
that will cost them substantial moneys.
chief meets President
Asian Development Bank, Haruhiko Kuroda, who is
currently on a visit to Sri Lanka called on
President Mahinda Rajapaksa at Temple Trees, last
|Chevron bottom line boosted by
By Azhar Razak
Chevron Lubricants Lanka Plc (CLL), the marketer of
Caltex, Havoline, Delo and Lanka branded lubricants
in Sri Lanka has achieved a profit after tax of
Rs.375 million for the quarter ended March 31, 2010,
up by a staggering 61 percent compared YoY.
According to the Managing Director/Chief Executive
Officer of CLL, Kishu Gomes, the main reasons for
the growth was due to increased volumes (helped by
the local industry growth of close to 5% post war),
growth in export volumes, lower raw material prices
(compared to 1Q last year) and better operational
expenses (OPEX) management exercised by the company.
“We had also experienced a significant volume
growth in the North and East due to the end of the
war and with all the developments that is taking
place there, the region is well poised to grow and
could become a major market in 2-3 years time,”
Gomes told the Nation Economist in a telephone
He said that in terms of volume, the company had
witnessed a growth of at least 50 percent in the
North and a growth of 20 percent in the East. In
money terms, revenue however recorded a marginal
growth of 1 percent from Rs.2.27 billion to Rs.2.29
billion although cost of sales reduced by a higher
rate of 11 percent to Rs.1.5 billion resulting in a
gross profit growth of a healthy 39 percent to
“We were also helped by an efficient OPEX management
where we were able to trim costs down and both our
Bangladeshi as well as Maldivian operations
performed extremely well,” Gomes said.
Meanwhile, operating profit of CLL grew by 57
percent to Rs.564.8 million for the quarter while
finance income rose by a substantial 144 percent to
CLL, which caters to both the retail and
industrial segments in the Sri Lankan market, is
represented in Maldives by Damas and in Bangladesh
by the Navana Group. Over 90% of products marketed
by CLL are produced locally at their blending plant
in Kolonnawa, a facility which was awarded
accreditation from the British Standards Institute.
The finished goods are then either distributed
locally through its extensive island-wide network,
or shipped as exports to Maldives and Bangladesh.
finance company gets Rs.200m
By Azhar Razak
Asia Asset Finance Ltd, a subsidiary of
the financial services group, Asia Capital PLC (ACAP)
has received a cash infusion of Rs.200 million from
its parent company during the year ended March 31,
2009, according to the group’s latest financials.
The investment was directed towards averting a
cash crisis since the audit report on the Annual
Report last year (year ended March 31, 2009) stated
the company’s and group’s ability to continue as a
‘going concern’ was dependent on the success of its
future endeavours and negotiation of finance
“ACAP has met its commitment for the year by
investing Rs.200 million during the financial year
in the shares of Asia Asset Finance Limited through
rights with calls of Rs.50 million on October 31 and
December 31, 2009 and Rs.100 Mn on March 31, 2010,”
Asia Capital Plc Chairman, Mano Nanayakkara told The
Bottom Line yesterday.
Meanwhile, according to recent annual un-audited
(provisional) figures, ACAP has surprisingly posted
a profit-after-tax of Rs.235.6 million for the year
ended March 31, 2010, a 162% turnaround from a loss
of Rs.379.2 million recorded during the
corresponding period last year. The group’s bottom
line has been helped by the sharp gross profit of
Rs.727 million (compared to Rs.466mn last year)
achieved through substantially scaling down the
group’s cost of sales by 51% to a mere Rs.651
million. The income statement also shows that the
group has made Rs.75.3 million profit over the
disposal of subsidiary shares and Rs.121.9 million
as share of profit derived from Associates.
While releasing the audited annual report of the
company last year, the auditors of ACAP, KPMG Ford
Rhodes drew attention to the matters in the
financial statements where the company and the group
had incurred a net loss of Rs.361 million and Rs.379
million respectively for the year ended March 31,
2009 and as of that date the company’s and group’s
accumulated losses were Rs.1,015 million and
Rs.1,081 million respectively. Further, the auditors
noted that as at that date, the company’s current
liabilities had exceeded its current assets by
Rs.424 million and the current liabilities of the
group exceeded its current assets by Rs.203 million.
“The company and group are said to be in the
process of negotiating finance facilities. The
company’s and group’s ability to continue as a
growing concern depends on the success of its future
endeavours and negotiation of finance facilities,”
the auditors, who however did not ‘qualify’ the
Adding further, the auditors warned that the
going concern of the subsidiary companies Asia Asset
Finance Limited, Asia Fort Sri Lanka Direct
Investment Fund Limited, Asia Growth Fund (Pvt)
Limited and Investor Access Asia (Pvt) Limited are
in doubt but the financial statements of the
subsidiaries were prepared on the assumption that
they are going concern as the directors felt
confident that the financial position of these
companies could improve and the parent company has
agreed to provide financial support.
It is noteworthy to mention that the audit reports
for both financial years, ending March 31, 2008 and
March 2009 had been similar drawing attention to the
Asia Capital is a diversified financial services
group with operations encompassing investment
banking, asset management, stock broking, fixed
income securities trading, insurance underwriting,
finance house operations (asset leasing, deposit
mobilisation) and commodities broking. Asia
Capital’s subsidiaries also include Asia Securities
(Pvt) Ltd, Asia Fort Sri Lanka Direct Investment
Fund Ltd, and Asia Apparel Trading (Pvt) Limited.
|US cancels travel warning on
Citing improvement in the
security situation in Sri Lanka after the defeat of
Liberation Tigers of Tamil Eelam (LTTE) last year,
the US has announced lifting of its travel advisory
for the island nation.
Sri Lankan Ambassador to the US, Jaliya
Wickramasuriya welcomed the decision.
“The Travel Warning issued for Sri Lanka on November
19, 2009 has been cancelled, effective May 26,
2010,” the State Department said in a statement.
“Department of State has cancelled the Travel
Warning for Sri Lanka due to improvements in safety
and security conditions throughout the country,” the
brief statement said.
“As we have moved past the direct conflict, the
longer that we come from the direct conflict, the
more we start to hopefully see Sri Lankan society
stabilise, heal, then a great deal of effort over a
number of months to deal with the displaced
population of Sri Lanka.”
|Oil drilling to start in Q2,
In its interim statements Cairn
Indian Limited who has set up a subsidiary in Sri
Lanka said that the drilling of the three oil wells
in the Mannar Basin of Sri Lanka will commence in
second quarter of 2011 financial year.
“The 3D seismic data is currently being processed. A
detailed Metocean study has recently commenced in
preparation for the Exploration drilling of three
wells planned to commence in Q2 CY 2011”
Cairn India’s Operating revenues for the fourth
quarter rose by 45% at INR 16,230 million (USD 342
million) (corresponding to the previous year: INR
11,168 million (USD 243 million) due to Rajasthan
volumes making the company to record a Profit after
tax higher by 53% at INR 10,511 million (USD 222
million) (corresponding previous year: INR 6,870
million (USD 150 million), according to interim
statement issued by the company.
Cairn Lanka Private Limited, the wholly owned
subsidiary of Cairn India, acquired a 1750 km2 3D
seismic survey data in the Mannar Basin in Sri Lanka
between December 2009 and January 2010, The Mannar
basin is an under-explored frontier petroleum
province, virtually un-explored in Sri Lanka with
both structural and stratigraphic plays. The
programme fulfils the commitment of 1,450 km2 of 3D
seismic data acquisition.
|ADB prices $3 billion
three-year global bond issue
The Asian Development Bank (ADB) returned to the US
dollar bond market last week with the pricing of a
$3 billion three-year global benchmark bond issue,
proceeds of which will be part of the bank’s
ordinary capital resources and used in its non-concessional
The bonds, with a coupon rate of 1.625% per annum
payable semiannually and a maturity date of 15 July
2013, were priced at 99.626% to yield 46 basis
points over the 1.375% US Treasury notes due May
The transaction was lead-managed by Daiwa Capital
Markets, Goldman Sachs International, Morgan Stanley
and UBS Investment Bank. A syndicate group was also
formed consisting of Bank of America Merrill Lynch,
BNP Paribas, Credit Suisse, HSBC, JP Morgan, Nomura,
RBC Capital Markets, and TD Securities.
marks ADB’s second issue in the US dollar global
bond market in 2010, having issued bonds with a
five-year maturity in February this year.
“We are very pleased with the transaction. The
robust sponsorship from investors globally resulted
in an oversubscribed book of around $3.3 billion,”
said ADB Treasurer Mikio Kashiwagi.
previous ADB benchmark transactions, the issue
achieved broad primary market distribution with 46%
of the bonds placed in the Americas, 32% in Asia and
22% with investors in Europe, Middle East and
Africa. By investor type, 63% of the bonds went to
central bank and government institutions, 17% to
banks, 14% to fund managers and 6% to other types of
ADB plans to raise around $15 billion from the
international capital markets in 2010.