Two Browns Group hotel companies to raise Rs.28bn via rights issues

Browns Group hotel companies, Eden Resorts PLC and Palm Garden Hotels PLC are gearing to collectively to raise fresh capital to the tune of about Rs.28.2 billion via rights issues to rectify serious capital losses at the two companies. 

Palm Garden Hotels plans to issue 432, 670,000 ordinary shares in the proportion of 10 ordinary shares for every one share held at the price of Rs.41 each to raise Rs.17.7 billion.

Palm Garden share fell 18.29 percent or by Rs.10.30 to close at Rs.46.00, yesterday.

Eden Resorts plans to issue 1,056, 000, 000 new shares at Rs.10 each in the proportion of two new shares for every existing share to raise little over Rs.10.5 billion.

Eden Resorts share closed at Rs.11.80 yesterday, down Rs.3.70 or 23.87 percent from the previous close.

Both companies said their equity as at March 31, 2023 had eroded to less than 50 percent of its stated capital. 

Following the full subscription of the rights issue, Eden Resorts expects its stated capital to rise Rs.16.38 billion from Rs.5.8 billion and the number of shares to 1.58 billion from 528 million.

Likewise, Palm Garden expects the stated capital to increase to Rs.20.1 billion from Rs.2.4 billion and the number of shares to 475.9 million from 43.2 million.

Palms Garden and Browns Hotels and Resorts Limited collectively hold 97 percent stake in Eden Resorts.

Browns Hotels and Resorts Limited has 89 percent stake in Palm Garden.