Browns Beach in Rs.1.4bn cash call to retire debt, meet costs

Browns Beach Hotels PLC, a hotel owning firm controlled by Harry Jayawardena’s Aitken Spence and Mesltacorp Limited said it was raising Rs.1.4 billion through a rights issue, subject to shareholder and Colombo Stock Exchange approval. 

Browns Beach said the proceeds of the rights issue would be used to reduce existing debt levels of the company and to finance the escalation of project costs of its star-class hotel, Heritance Negombo. 
Following its acquisition, Browns Beach Hotel was completely demolished and 143-room five star hotel was constructed in the property with an investment of approximately Rs.5 billion. The hotel was opened this April for 
commercial operations. 

To raise the funds the company will be issuing 54 million new ordinary shares at a proportion of 5 new ordinary shares for every 12 ordinary shares already held at a price of Rs.25.85 per share. 
The current stated capital of the company stands at Rs.2.38 billion comprising of 129.6 million shares.