Notable Rights Issues by two non-blue chip companies to raise Rs. 28.3 billion

By Hiran H.Senewiratne

Two CSE entities, namely Palm Garden Hotels and its associate Eden Hotels Lanka, announced plans to raise a staggering Rs. 28.3 billion via separate Rights Issues. These have been the highest Rights Issues by non- blue chip companies in the recent past, market analysts said.

Palm Garden announced a Rights Issue of 10 new ordinary shares for every one ordinary share held at Rs. 41 each to raise Rs. 17.74 billion. Its net asset per share is Rs. 12.19, while the share price yesterday closed at Rs. 46 down by 18% or Rs. 10.30 from the previous day.

Eden announced a Rights Issue of 2 new ordinary shares for every one held at Rs. 10 each to raise Rs. 10.56 billion. Eden’s net assets per share is Rs. 3.54. Its share price declined by 24% or Rs. 3.70 to close at Rs. 11.80 yesterday.

Eden saw group revenue double to Rs. 2.25 billion, while gross profit grew to Rs. 1.5 billion from Rs. 812 million in FY22. Pre-tax loss doubled to Rs. 6.3 billion due to more than doubling of finance cost to Rs. 5 billion.

Palm Garden Hotels owns a 49.5 percent stake in Eden along with 42.6 percent by Browns Hotels and Resorts. The Public Holding percentage as at 31.03.2023 is 7.85 percent, comprising 6,911 shareholders.

Browns Hotels owns 89.38 percent stake in Palm Garden. The public holding percentage as at 31.03.2023 is 10.622 percent, comprising 2,232 shareholders. Funds raised will be used to rectify the serious loss of capital of both companies.

Sri Lanka’s shares edged up throughout yesterday and trade was pushed up by the bank and financial industries due to the confidence in investors that debt restructuring would not affect the banking and financial sector entities, stock market analysts said.

The market started gaining after the Central Bank policy rate cut and the falling in the inflation rate, stimulating buying interest and driving the sentiment up, analysts added.

The main All- Share Price Index was up by 97.33 points, while the most liquid index S&P SL20 was up 10.5 points. Turnover stood at Rs 2.8 billion with four crossings. Those crossings were reported in Sampath Bank, which crossed 26.5 million to the tune of Rs 1.4 billion, its shares traded at Rs 55, Commercial Bank 659,000 shares crossed for Rs 43.5 million; its shares traded at Rs 66, Distilleries one million shares crossed to the tune of Rs 22.5 million; its shares traded at Rs 22.50 and JKH 150,000 shares crossed for Rs 21.1 million, its shares fetched Rs 140.75.

In the retail market, top seven companies that mainly contributed to the turnover were; Sampath Bank Rs 159 million (2.9 million shares traded), Distilleries Rs 114 million (5.1 million shares traded), HNB Rs 103.3 million (754,000 shares traded), First Capital Treasuries Rs 80.6 million (2.9 million shares traded), LOLC Finance Rs 62.5 million (10.4 million shares traded), Hayleys Rs 54.5 million (750,000 shares traded) and Lanka IOC Rs 54.2 million (409,000 shares traded). During the day 97.2 million share volumes changed hands in 15000 transactions.Yesterday, the Central Bank’s US dollar selling rate was Rs 328.92 and the buying rate Rs 311.60.