Reef’s Rs. 786 m Rights snapped up; shareholders ask for more

Tuesday, 7 December 2010 00:45 - - {{hitsCtrl.values.hits}}

The Rs. 786.5 million worth Rights Issue of Hotel Reefcomber Plc has been heavily oversubscribed reeffirming the bullish investor sentiments on the company as well as prospects for the tourism industry.

The Company in October announced a two for one Rights at Rs. 25 each. The number of shares to be issued was 31,461,302 ordinary shares. When the Rights Issue closed last week, the overall demand had been for 38.45 million shares. The Rights which included three warrants exercisable in 2011, 2012 and 2015 was part of Rs. 6.4 billion capital raising exercise over a five year time horizon to finance Reef’s aggressive expansion. The number of shareholders who accepted their Rights entitlement was 1,875 with the amount being 30.5 million shares. There had been 1,185 shareholders who had applied for additional shares amounting to 7.95 million shares. The issue and its structuring have been viewed by industry analysts as a strong indication of the strategic intent of Hotel Reefcomber.

The Rights Issue complements the aggressive expansion plans for Hotel Reefcomber Plc and follows on the heels of the Company’s strategic purchase of a 7-acre property with a picturesque and extensive beach front in the tourism hub of Waskaduwa, Kalutara North.

The Company intends to commence the construction of a 4 star, 150 roomed resort in early 2011, whilst plans are also underway to undertake a complete renovation of its existing property in Hikkaduwa. In the medium term the Company will follow a strategy of expansion with focus on acquisition of property along the beautiful coastline of Sri Lanka, thereby enhancing its resort portfolio.

Following the sale of the hotel by Amaya Hotels and Resorts, the new owners spearheaded by Triad Advertising fame Dilith Jayaweera and Varuni Amunugama Fernando have appointed a new Board Chairman of which is tourism industry veteran Prema Cooray.

The Rights subscribed will have attached thereto Warrants in the following manner: One (1) Warrant exercisable in 2011 for each share subscribed at an exercise price of Rs. 30; One (1) Warrant exercisable in 2012 for each share subscribed at an exercise price of Rs. 30 and Two (2) Warrants exercisable in 2015 for each share subscribed at an exercise price of Rs. 40.