Funds intended for financial restructuring and value preservation

The controlling shareholder of Mahaweli Reach Hotels PLC (MRH), Universal Enterprises Private Ltd. of the Maldives, has loaned USD one million to MRH last week in a related party transaction to enable settlement of outstanding liabilities, MRH announced in a Stock Exchange filing on Thursday.

Universal which owns 69.44% of MRH has extended this loan at an interest rate on 6.5% + one month SOFR with a grace period of 18 months and a tenure of 60 months.

The rationale for this transaction was described in the filing as “the need of the company to obtain additional funding to assure business continuity and value preservation and in order to facilitate the company in restructuring its the financial obligations and to assist in the strategic objectives of the company.”

The filing said the Related Party Transactions Review Committee of MRH is of the view that the transaction is on normal commercial terms, and is not prejudicial to the interests of the entity and its minority shareholders and it is not obtaining an opinion from an independent expert prior to forming its view on the transaction.

“Currently the aggregate value and total value of transactions with this party will be USD one million. Based on the Exchange Rate for the United States Dollar published by the Central Bank of Sri Lanka on August 22, 2023, this transaction does not amount to one third of the total assets of the company,” the filing said.