Hunas Falls to get Rs.4.2bn capital boost from parent

• Serenity Lake to transfer ownership stakes it holds in several companies to Hunas Falls

With a view to augment the asset position, Serenity Lake Leisure Ltd, the controlling shareholder of Hunas Falls Hotels PLC, is gearing to infuse the latter with Rs.4.25 billion worth capital by transferring ownership stakes the former holds in several companies.

The Board of Directors of Hunas Falls Hotels PLC on 22nd of this month unanimously approved the proposed share transfer of the entities after receiving legal opinion and advice on the compliance of the methodology adopted, according to a filing with the Colombo Stock Exchange (CSE) by Hunas Falls, last week.
Accordingly, the company has called for an Extraordinary General Meeting on 13th of January to secure shareholder approval for the move.

The company noted that shares of new entities, which are proposed to be transferred from Serenity Lake Leisure, would be entered in the accounts of the company as investments, while assuring that it would not in any way result in a dilution of the interest of the minority shareholders of the company.

“The said infusion of capital will not result in any issue of new shares and there will be no dilution of minority interest. According to appendix 8A section (18) there will be a major transaction under section 185 of the Companies Act of No 07 of 2007,” the filing noted.

Following the proposed capital infusion, Hunas Falls Hotels PLC is set to be renamed as Hunas Holding PLC subject to shareholder approval and the Registrar of Companies.

Serenity Lake Leisure Ltd., which holds 94 percent stake in Hunas Falls Hotels, is planning to transfer shares of 11 entities under its portfolio including controlling stake of seven entities.

In the Hydro Power sector, Serenity Lake expects to transfer 30 percent, 19 percent and 20 percent stakes in Hydro Power Plants, Kuruganaga Hydro (Pvt) Ltd and Weswin Power Galaha (Pvt) Ltd along with full ownership  stakes in Amunumulla Suhada Electricity Generation Company (Pvt) Ltd and Sustainable Energy Holdings (Pvt) Ltd to Hunas Falls.

In the tea sector, Serenity Lake Leisure is planning to transfer 20 percent, 100 percent and 90 percent stakes it holds in Mercantile Produce Brokers (Pvt) Ltd, Suriyakanda Plantations (Pvt) Ltd and Rainforest Tea Factory (Pvt) Ltd.

In addition, Hunas Falls is also expected to receive the controlling ownership of key hotel properties, including 100 percent ownership  stake in Hunas Properties (Pvt) Ltd and 90 percent ownership stakes in Boulder Gardens (Pvt) Ltd and Rainforest Hotels (Pvt) Ltd.

The valuation of the above assets has been obtained from KPMG, according to the company.

Serenity Lake Leisure, a special purpose vehicle set up by TAD Lanka Holdings Ltd. and TAD Lanka Plantations Ltd in early 2019 acquired 66.2 percent stake in Hunas Falls from Hayleys Group for Rs.696.3 million.

TAD Lanka Holdings, which was founded in 2016 by Toshiaki Tanaka, Atheeq Ansar and Dhanuka Samarasinghe, holds over 25 subsidiaries operating in multiple segments with prime focus on sustainable growth and green business. 

The group is also jointly developing a luxury boutique hotel on 10-acre beachfront property in Mirissa jointly with Japan’s Odakyu Electric Railway Co, UDS Ltd and Japanese property investment consulting firm Stasia Capital Holdings with an investment of US$ 22.6 million.

Share price of Hunas Falls Hotels was up by Rs.7.50 or 0.82 percent to Rs.924 on Friday’s market closure.