SOERU sets record straight on HDL and SLT divestiture

The State-Owned Enterprise Restructuring Unit (SOERU) yesterday addressed the misconceptions regarding the divestiture of Hotel Developers Lanka (HDL) Ltd and Sri Lanka Telecom PLC (SLT).

Contrary to the claims, the land involved in the HDL transaction is 4.61 acres, not seven acres. This land is available for use by HDL on a leasehold basis until 2111. An additional 1.875 acres will be made available to HDL on a lease basis until 2111, at a price of Rs.4.4 billion, subject to the Cabinet approval. This additional land includes two restaurants, a swimming pool, a gymnasium and parking.

The decision to allocate this land was made by the Cabinet of Ministers on March 21, 2022. Despite the recent upgrades, Colombo Hilton remains a five-star property and has not been upgraded to a seven-star.

The SOERU noted that the government chief valuer confirmed the previous valuation of HDL, dated November 19, 2022, was lower than the valuation released in July 2024. While a financial offer for HDL has been received from Melwa Hotels & Resorts (Pvt.) Ltd, the only entity to put forward an offer in July, negotiations are ongoing and the final price has not been finalised.

The SOERU stressed that there is no political interference in the divestiture process, emphasising the transparent and price discovery process followed. 

“At no stage has a politician and/or public officer attempted to influence or interfere with the work of the SOERU with respect to the divestiture of HDL or any other state-owned enterprise,” the SOERU stated.

Regarding SLT, the SOERU said valuations are ongoing and yet to be finalised. The divestiture process is transparent and conducted under the Divestiture Guidelines approved by the Cabinet. The SOERU denied the allegations that SLT’s financial results have been manipulated to reduce its value. 

“As a listed entity, SLT must abide by the continuous listing rules of the Colombo Stock Exchange. These rules require a board audit committee chaired by a directors, who is not the chairperson of the company. One of the key responsibilities of the audit committee is to ensure the integrity of the company’s financial statements,” the SOERU noted.

A major foreign investor with a 45 percent stake in SLT, who also has significant board presence, is unlikely to agree to manipulate SLT’s value downwards, the SOERU added. 

Furthermore, the SOERU, in collaboration with the Telecommunications Regulatory Commission of Sri Lanka, resolved a long-standing spectrum issue that was negatively impacting SLT’s performance. The new spectrum allocation is expected to significantly increase SLT’s value.

The SOERU also clarified that no organisation or individual has contacted it to clarify concerns. 

“At the very outset, the SOERU met and discussed the SOE reform programme with the senior members — and in some instances, the leaders — of three major political parties. At every important stage of the divestiture process, the SOERU has released statements to the press, in order to keep the public informed,” the SOERU shared.