Seylan Bank initiates debt recovery action against two Asia Capital resort properties

• Asia Capital says taking measures to safeguard assets of the companies and is in the process of coming up with a plan to settle the outstanding creditors

Asia Capital PLC yesterday said Seylan Bank has adopted debt recovery action against two properties owned by Beach Resorts Kosgoda (Pvt) Ltd and Wadduwa Resorts (Pvt) Ltd, which are subsidiaries of Asia Capital.
Asia Capital said the total loan value due to Seylan Bank is Rs.572.07 million and the value of the said two properties are higher than the loan outstanding. 
According to Asia Capital’s 2022 annual report, the total value of the two properties was estimated at Rs. 2.02 billion, revalued as of March 31, 2019.
“Aware of the situation, the Board of Directors has resolved to safeguard the assets of the companies and that the company is in the process of coming up with a plan to settle the outstanding creditors, which will be notified in due course,” Asia Capital said in a filing to the Colombo Stock Exchange.
“In the meantime, directors will take the appropriate steps to safeguard the assets including making further representation to the banking institution,” it added. 
Asia Capital stated that the operations of the two hotel properties were negatively impacted first by the Easter attacks in 2019, followed by the Covid-19 pandemic with unprecedented border closures in 2020 and 2021, and subsequently, the economic crisis in 2022.
“The resorts witnessed a rebound in occupancies during the second half of the year (2022) driven by domestic travel and improved tourist arrivals. However, operating margins were under pressure given the rising input and utility costs as yields did not pick up commensurately since the benefit of foreign currency revenue was limited due to the gradual recovery of tourism,” the company said.
Asia Capital share closed at Rs.4.00 yesterday, down by 10 cents or 2.44 percent.