Galadari Hotels will be converting its debt to equity following a “serious loss of capital” due to recent exchange rate fluctuations, the organisation’s Financial Controller Upali Perera said.
Loans obtained by the Galadari Hotel were in the dollar currency resulting in the hotel’s loss of share capital, he explained.
However, he noted that following the recent Extraordinary General Meeting (EGM) the hotel had decided to covert this loan to equity that would “in the opinion of the board, contribute significantly in strengthening the company’s financial position and its ability to generate profits,” he told a media briefing on Thursday
The foreign exchange losses had risen to Rs.733.2 million causing serious problems to the hotel’s profitability.
In this respect, the company would be going in for a private placement of 20% of the issued shares, Mr. Perera said.
In the meantime, the company has been engaged in carrying out refurbishments amounting to approximately Rs.150 million for two floors; Rs.10 million for its Coffee Shop; Rs.18 million on the new Bougainvillea Ballroom; and currently a further Rs.120 million on two more floors.
Galadari Hotel General Manager Sampath Siriwardena told reporters that although the hotel’s management does not have any expansion plans in mind they were looking at other possibilities.He noted there was interest in changing the brand name of the hotel and then look at the possibility of obtaining an international company to manage the property. However, in view of the present circumstances they would be looking at initially converting debt to equity and later looking at investing in the hotel.
Expressing concerns over the room rates, Mr. Siriwardena observed they were unable to initiate any new promotions due to these as they would not become attractive enough to generate interest among locals during the off-peak season.
Speaking on the recruitment drive, he noted they were engaging individuals as and when required and the staff of 525 has relatively remained the same since last year. The company has an additional workforce of 100 casual employees as well.