Browns Beach Hotels to delist from CSE

• offer price set at Rs.30

The board of directors of Browns Beach Hotels PLC (BBH) has resolved to delist the company’s shares from the official list of the Colombo Stock Exchange (CSE), according to a corporate disclosure filed yesterday. 

The move, approved by the board yesterday, is subject to obtaining the necessary shareholder and regulatory approvals.

To facilitate the delisting, the board has made arrangements with its majority shareholders, Melstacorp PLC and Aitken Spence Hotel Holdings PLC, to purchase the shares from the minority shareholders, who wish to divest their holdings.

The exit offer price has been set at Rs.30 per share. This price was determined based on an independent valuation by BDO Partners and represents a premium over the volume-weighted average price of Rs.18.58 recorded over the preceding year, as well as the relative valuation of Rs.20.89 derived from the enterprise value to the EBITDA ratio.

The decision to exit the exchange follows a critical assessment of the company’s present financial position, high debt levels and future profitability outlook in the context of the tourism industry. The company and its subsidiary Negombo Beach Resorts (Pvt.) Ltd have faced sustained financial difficulties since 2019, impacted by the Easter Sunday attacks, COVID-19 pandemic and economic crisis. Despite a recovery in the tourism sector, the revenue generated over the past two years has been insufficient to offset the accumulated losses.

The BBH shares were transferred to the CSE Watch List on August 1, 2024, following an emphasis of matter on the company’s “going concern” status in its 2023/24 audit report. 

Additionally, the company is currently non-compliant with the minimum public holding requirements stipulated in the listing rules. As of March 31, 2025, the company had 2,505 shareholders. The management has expressed the view that rectifying this non-compliance is not viable in the current economic climate.

Financially, the group remains under significant strain, despite the recent operational improvements. For the financial year ended March 31, 2025, the group reported a loss after tax of Rs.154 million, a reduction from the Rs.467 million loss recorded the previous year. The interim results for the six months ended September 30, 2025 indicated a narrowing of losses to Rs.40.5 million, compared to Rs.206.9 million during the same period in 2024. 

As of March 31, 2025, the group’s total assets were recorded at Rs.5.1 billion, with property, plant and equipment valued at approximately Rs.4.5 billion. However, the accumulated losses standing at Rs.4.3 billion have eroded the company’s stated capital and reserves, resulting in a negative equity position of Rs.750 million.

The property holds a significant place in the history of Negombo’s hospitality sector. Its modern era was shaped by the late Deshamanya D.H.S. Jayawardena, who joined the board in 1993 and served as Chairman from 2007 until early 2025. Under his visionary leadership, the original Browns Beach Hotel was demolished and redeveloped into the luxury five-star Heritance Negombo, which opened in 2016. The 139-room resort, spanning 6.5 acres of beachfront land, was rebranded in 2023 as Sentido Heritance Negombo through a franchise partnership with DER TOURISTIK HOTELS GmbH, Germany, aimed at attracting long-haul European travellers.

Following the passing of Jayawardena, the leadership transitioned to his daughter Stasshani Jayawardena, who assumed the role of Executive Chairperson in February 2025. The management has since focused on navigating the challenging financial landscape, relying heavily on letters of support from Melstacorp PLC and Aitken Spence Hotel Holdings PLC to maintain operations and meet financial obligations. 

(NF)