Anilana Hotels hunts for strategic investor amidst ‘serious loss of capital’ and boardroom wars

• Group battles Rs.953.5mn net loss as net assets plunge to 11.5% of stated capital
• New board takes charge following unauthorised asset disposals and provisional liquidation of parent company

By Nishel Fernando
Anilana Hotels and Properties PLC is urgently scouting for a new strategic investor to infuse fresh capital and restart its dormant operations, as the hospitality group battles a deepening financial crisis and the fallout from a bitter boardroom power struggle allegedly triggered by unauthorised asset disposals.
The group, which owns luxury properties in Pasikuda and Nilaveli, reported a massive net loss of Rs.953.5 million for the financial year ended March 31, 2024, widening significantly from the Rs.627.4 million loss recorded the previous year. 
According to its annual report, the company’s financial position has deteriorated to the point where its net assets have fallen to just 11.5 percent of its stated capital, triggering a “serious loss of capital” warning under Section 220 of the Companies Act.
The auditors have raised a red flag regarding the group’s ability to continue as a going concern, noting that the current liabilities exceeded the current assets by a staggering Rs.1.86 billion as of March 2024. 
The hunt for a lifeline comes in the wake of severe internal conflict. The annual report discloses “significant internal disputes”, where one faction of the board acted in opposition to the other, leading to a breakdown in management continuity. 
The conflict reached a head in August 2024, when the directors managing the operations were removed and replaced at an Extraordinary General Meeting. The dispute was so severe that the company was unable to obtain the signatures from the former directors for critical board sub-committee reports, as they had resigned and were “no longer contactable”.
While the annual report cites “internal incidents identified in early 2024” as a trigger for tighter governance, the external reports indicate the crisis was precipitated by an unauthorised land sale executed by the former managing director, without the board approval. 
The annual report confirms that the sale of the Dambulla land, completed in June 2024, required a special resolution from the shareholders in October 2024 to “ratify and approve” the transaction, signalling a procedural breach that needed retrospective correction. 
The group’s operational footprint has shrunk dramatically, with its flagship hotels, Anilana Nilaveli and Anilana Pasikuda, temporarily closed since November 2022 and generating zero turnover since.
In a desperate bid to manage its liabilities, the company has begun liquidating assets. In June 2024, Anilana sold a 39-acre prime land plot in Dambulla—originally earmarked for a country club—to Riverside Serenade (Pvt.) Ltd for Rs.240 million. 
The other ambitious projects have also crumbled, including a beachfront property in Panichchankerni, intended for an eco-friendly resort, which was acquired by a bank via auction in April 2021, following the parate execution. 
Meanwhile, the projects in Selladiv Island and Vakarai remain in the pipeline but are effectively stalled. Compounding these woes, the group’s subsidiary Eastern Development Enterprises (Pvt.) Ltd is facing a winding-up petition filed by Stasen Exports (Pvt.) Ltd in the Commercial High Court.
Despite the gloomy outlook, the company is pinning its hopes on a turnaround led by a restructured board. In a disclosure to the Colombo Stock Exchange, the company announced a fresh composition of its board subcommittees, effective February 2025. The new lineup features restructuring veterans Rod Sutton and Forkey Wong as Independent Non-Executive Directors, alongside Chairperson Ellyn Tan Huixian. 
The directors are currently negotiating with a new investor for capital infusion to restart the hotels and are in discussions with financial institutions to restructure the existing borrowings.
The search for a new investor is critical, given the precarious state of the company’s major shareholder. SOMAP International Pte Ltd, which holds a controlling 72.58 percent stake, is listed as being in “provisional liquidation”. Other top shareholders include the SSBT-GMO Emerging Markets Fund, with 8.11 percent and People’s Leasing & Finance PLC, which holds 2.81 percent of the company. 
The group maintains that while the properties are currently commercially inactive, infrastructure integrity remains high, providing a foundation for a potential restart, if a strategic partner is secured.