Elpitiya Plantations to move ahead with US$4mn ESCAPE theme park project despite COVID-19 impact

Sri Lanka’s Elpitiya Plantations PLC is planning to move ahead with the development of US$ 4 million ESCAPE theme park in the Galle district later this year with Sim Leisure Group Ltd, Singapore Stock Exchange listed leading theme park developer and operator based in Malaysia, despite the COVID-19 pandemic which has adversely impacted the company’s performance and the country’s tourism industry. 

“The company would continue to diversify into non-traditional ventures and as per the announcement made on 17th April, 2020, we hope to commence the joint venture project- Adventure Theme with the Singaporean investor in  Deviturai, Ethkandura during the latter part of 2020, to further enhance company’s revenue and also to boost adventure tourism in Sri Lanka,” Elpitiya Plantations stated filing a disclosure in the CSE in relation to the impact of COVID-19 pandemic on the company. 

Elpitiya Plantations signed the definitive shareholder agreement with Sim Leisure Group Ltd on 13th of April to develop and operate theme parks under the ‘ESCAPE’ brand in Sri Lanka.  Sim Leisure is expected to take the majority stake of 51 percent in the joint-venture company, Venture Valley Pte while Elpitiya will own the remaining stake of 49 percent. 

Pursuant to the agreement, Elpitiya would sublease a plot of land to Venture Valley located in Deviturai Estate in the Galle district and Venture Valley would construct and operate ESCAPE Sri Lanka using the company’s expertise. 

According to Sim Leisure, the construction of Phase 1 of ESCAPE Sri Lanka on 30 acres is scheduled to commence in the financial year ending 31 December 2020, targeting to open for the public beginning of FY2021.
Deviturai Estate spans across 896.22 hectares with oil palm, rubber and tea being cultivated in an area of 598.46 hectares. In addition, the estate also houses a cinnamon processing plant and carries on manufacturing all types of wooden materials. 

The cost for ESCAPE Sri Lanka project is estimated at US$ 4 million, of which 40 percent (or US$ 1.6 million) would be funded by Sim Leisure and Elpitiya proportionate to their respective shareholding interests in Venture Valley upon subscription.

The balance 60 percent (amounting to US$ 2.4 million) is expected to be funded by bank loans, which would be secured by corporate guarantees by Sim Leisure and Elpitiya proportionate to their respective shareholding interests in Venture Valley upon subscription.

Sim Leisure plans to target Sri Lanka’s large ‘untapped domestic tourism sector’ which has witnessed a significant increase over the years. 

Elpitiya Plantations highlighted that the project is the first of its kind among Sri Lanka’s Regional Plantation Companies. 

Following the outbreak of COVID-19 in the country, Elpitiya Plantations reported a significant drop in crop intake and revenues on tea, rubber and oil palm due to working day restrictions and the drought in tea growing regions too partly contributed towards it.  

The crop  intake and revenues declined by around 30 percent on tea while rubber and oil palm recorded a decline of 10 percent during the period 15th March to 19th April. 

Further, the company’s cash flow was also severely impacted due to the cancellation of the Colombo Tea Auction from mid-March. However, the company expects that the impact on cashflow would improve as the e-Tea Auctions commenced from 6th of April, and provided the present demand for tea continues.  

“The company would endeavour to optimize productivity and revenue income in the ensuing months, though it’s likely to be below targets, to curb the impact of COVID-19,” Elpitiya Plantations, Director/CEO, B Bulumulla said.
Elpitiya Plantations is an associated company of Harry Jayawarden- controlled blue chip conglomerate Aitken Spence PLC. (NF)