Galadhari Hotels (Lanka) PLC yesterday said that the company is currently facing a serious capital loss.
“We wish to notify you hereby that the company's unaudited financial statements for the quarter ended 31 March, 2012 discloses that it is currently facing a position of serious loss of capital,” a disclosure filed by the company said.
Although the disclosure did not mention the possible reasons for this serious loss of capital, analysts suspect that the company must have incurred heavy foreign exchange losses due to the borrowing it has in Us dollar terms.
For the quarter ended December 31, 2012, Galadari incurred a foreign exchange loss of Rs.191 million amidst a Rs.200 million loss for the quarter.
Galadari has Rs.9.1 billion in accumulated losses and 1.3 billion rupees in net assets.
The firm's long term debt is over four times its net assets at Rs.6.2 billion and its building and leased land is valued at Rs.7.6 billion. In October last year, the firm announced its plans to convert part of its debt into equity.
The hotel’s second largest shareholder with a 13 percent stake is the Employees’ Provident Fund (EPF), a pension fund of private sector worker money managed by the state.
The purchase of the troubled hotel by the EPF from Nawaloka Hospital PLC caused much controversy.
In compliance with the Companies Act, Galadari plans to convene an Extraordinary General Meeting regarding the issue on May 29, 2012 at the main ball room of the hotel.
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