Gaming facility restrictions to delay JKH’s US $ 445 mn syndicated loan : report

2 March 2015 06:11 am Views - 3707

With the new government’s decision not to allow gaming facilities in the proposed integrated resorts, John Keells Holdings PLC (JKH) has faced a delay in obtaining a US $ 445 million syndicated loan, foreign media said. The company in last December announced its intention to enter into a syndicated project loan facility with the Standard Chartered Bank to partly finance its US $ 650 million plus integrated resort project which had received previous government’s blessings to house gaming facilities.  JKH also raised in excess of Rs.40 billion from shareholders from a rights issue, that was attached with warrants in 2013.

The new government’s Prime Minister this January said they hoped to amend the Strategic Development Projects Act under which JKH’s Waterfront project and two other integrated resort projects received permission to house gaming facilities within their premises.

JKH in a stock exchange filing said it would “engage” the new government in this regard and assured that the project was still be viable given its multi-faceted nature, despite restrictions on gaming activities.

Even before the barring of gaming activities in the Waterfront Project, Fitch Ratings Lanka downgraded JKH’s AAA rating to AA+, mainly due to the poor performance of its key associate company South Asia Gateway Terminal (SAGT).

 The rating agency also said the Waterfront project carries considerable project-related risks, such as the possibility of cost-and-time-overruns, and noted any income from this project would likely to be generated after FY19.

 JKH last Friday informed the Colombo Stock Exchange of the termination of its rating arrangement with Fitch Ratings.

 “The company believes that a local rating is not warranted at this juncture of time considering the company’s current debt funding sources which are predominantly in foreign currency,” JKH said.

 However the company said if and when the need arises, it would obtain an international credit rating.