Deltacorp India Eyes Hilton Hotel Property in Colombo, Sri Lanka

11th March 2011, www.lankabusinessonline.com

An Indian firm in leisure and gaming has had talks in Sri Lanka over a state-run firm that owns a building in which Colombo's Hilton hotel is located, a media report said.

Sri Lanka's Ravaya newspaper said that at least two senior officials of India's Deltacorp had met Sri Lankan investment promotion and finance ministry officials over a possible purchase of the hotel property.

The Hilton Hotel is located on a structure built by Hotel Developers PLC, a Colombo listed firm in which the state holds controlling interest.

The firm said Thursday that land on which the hotel was built was leased by the Urban Development Authority, a state agency, to Cornel & Company, a private firm. The private firm had sub-lease the land to the hotel firm in return for equity.

But the state agency had terminated the lease as Cornel & Company had not paid annual lease rentals. The disclosure came after economic development minister Basil Rajapaksa said that the property had been fully taken over by the state.

The hotel firm is reported to be more than 60 percent owned by the state. But it had not submitted accounts to the Colombo Stock Exchange for years.

The Ravaya newspaper quoted Cornel & Company chief Cornel Perera as saying that he had not participated in talks between the Indian firm and the finance ministry.

The news report mentioned a value of 150 million US dollars for the property.

Deltacorp was in the news recently over possible plans to set up a casino in Colombo. The firm's website lists Sri Lanka as one of countries where a casino is "on the anvil."

Related Info :

• Colombo Hilton Operates as Usual. Govt Takes Over the Property from the Holding Company over Lease Issue

• Delta Corp Plans Casinos in Sri Lanka to Tap Surge in Tourist Arrivals

Colombo Hilton Operates as Usual. Govt Takes Over the Property from the Holding Company over Lease Issue

10th March 2011, www.lankabusinessonline.com

Sri Lanka's Hotel Developers, a listed firm which owns the building on which Colombo Hilton is operated said a land sub-leased from a private party had been taken over by the state.

The state land on which the building was put up has been sub-leased from Cornel and Company, a private firm, in 1984 in return for equity, Hotel Developers said in a filing, responding to an inquiry from Colombo Stock Exchange.

Cornel and Company had leased the land from Sri Lanka's Urban Development Authority (UDA), a state agency. The firm was expected to pay the lease to the UDA.

Hotel Developers said the UDA had repudiated the lease since rentals had not been paid from 1987 and the land had reverted back to the state.

The firm did not say whether it will have to pay rentals to the state or issue fresh stock or if there are any material effect on the company.

The stock closed at 135.80 rupees, up 5.80 Thursday.

Hilton Hotels and Resorts in a separate statement said they will continue to manage the hotel and are expecting to have talks with the state.

The statements came after Sri Lanka's economic development minister told parliament on Wednesday that that the Hilton property had been fully taken back to the state.

Sri Lanka Hilton to hold talks on management deal

Hilton Hotels and Resorts says it will continue to manage Sri Lanka's Colombo Hilton until discussions start with owners following a government move to take over the land on which the hotel is located.

"We have been advised that the Sri Lankan Government has been noted as the new owners of the land and building of the hotel," Hilton Hotels and Resorts said in a statement.

"In due course Hilton representatives will meet with the relevant parties to discuss the change in ownership and in the meantime, Hilton will continue to maintain normal business operations at the hotel."

Hilton said it has a management contract dating back from over 20 years ago with Hotel Developers (Lanka) PLC, a listed firm which owns the building.

On Wednesday economic development minister Basil Rajapaksa was reported to have told parliament that the state had "fully taken over" the property because land lease rentals had not been paid to the government.

Hotel Developers is a majority state controlled firm, which has not filed accounts with the stock exchange for years.

The state-backed project has been embroiled in controversy and litigation with disputes including among promoters and contractors.

LOLC Seeks Hotel Chains to Rebrand & Manage Confifi Hotels

24th October 2010, sundaytimes.lk, By Duruthu Edirimuni Chandrasekera

LOLC has zeroed in on three international hotel chain contenders to re-brand and manage Confifi hotels which they recently bought from the Furkhan family, sources close to the company said. They said chains such as Hilton and Accor are interested in managing these hotels.

“We plan to spend roughly US$ 30 million in refurbishing its properties,” a source told the Business Times. The Furkhans sold some of their stakes in related holding companies of the three Confifi hotels – Club Palm Garden (CPG), Riverina Hotel and Eden - to a consortium led by LOLC and Browns in June.

This consortium now own 52% in Confifi Hotel Holdings (owners and managers of CPG) and 25.5% in Riverina which they bought in late May while in June they bought 23.71% in Eden. Further firming its position in the country’s famed golden mile in southern Beruwela, the company bought a 60% stake in Tropical Villas, a beach resort with 50 luxury villas in Beruwela, through a subsidiary LOLC Leisure in August.

“With the Confifi hotels and this latest acquisition, LOLC has now increased its footprint to over 25 acres of prime beach front land,” the source said, adding that the total acquisition cost of all the hotels is more than Rs 800 million.

"Managing hotels is not our business. We bought these hotels as it was a good investment. We want to have a strategic alliance with a major international partner who will manage it for us,” he added.

He said the deal will be finalized soon-possibly by next month.