Citrus Leisure Group raises Rs. 923.5 m via private placements

• Completes fund raising exercise for resorts in Waskaduwa and Kalptiya
• Listing of subsidiaries by way of introduction in the offing
• Vallibel One takes 20% stake in Waskaduwa venture making it first associate investment post its Rs. 4.9 b mega private placement

In a further sign of booming confidence in the leisure sector as well as the promoters, Citrus Leisure Group yesterday completed a Rs. 923.5 million private placement to part equity finance two of its planned four-star luxury resorts in Waskaduwa and Kalpitiya.The private placements were by the individual subsidiaries owned by Citrus Leisure – Waskaduwa Beach Resorts Ltd. and Kalpitiya Beach Resorts Ltd.

Citrus had offered 37.14% stake in Waskaduwa venture and 27.8% stake in Kalpitiya.

“Both issues with shares offered at Rs. 10 each were oversubscribed heavily,” Citrus Leisure Director Dilith Jayaweera told the Daily FT. He added that an application to list these two companies by way of an introduction had been submitted as well.

For the Waskaduwa Venture, Vallibel One Ltd., the first holding company of Dhammika Perera, had taken a 20% stake amounting to Rs. 280 million. Vallibel One Executive Deputy Chairman Nimal Perera said the decision to take up 20% stake and treat Waskaduwa Resorts Ltd. as an associate was on account of strong post-war prospects in tourism in  Sri Lanka.

Dilith also said that work on both hotels would start simultaneously for completion within 24 months. Citrus Leisure has already started working with renowned architect Murad Ismail on designing both properties.  

Kalpitiya Beach Resort will have 150 rooms built at a cost of Rs. 1.9 billion, in addition to self-funded 28 water front villas, which will be sold separately on 99-year lease. The Waskaduwa resort, which will also have 150 rooms, will see an investment of Rs. 1.9 billion.

The private placements were part of the overall financing by Citrus, which late last year announced a multi-billion five year fund raiser inclusive of a Rights Issue backed by warrants exercisable in 2011, 2012 and 2015. The Issue was oversubscribed with shareholders subscribing for an additional 7.9 million shares, an oversubscription of six times for additional shares.

Citrus Leisure formally took over the management of Amaya Reef on 1 January 2011 and has rebranded the resort Citrus Hikkaduwa. The property is over-booked up to mid-April 2011 and the management believes it is on track to surpass financial targets. Plans are afoot for a five month refurbishment starting May 2011.

The refurbishment is being undertaken on a strict strategy of cost versus benefit and is designed to double revenue by the end of the next financial year through increased room rates and better use of common facilities.