Hilton, Hyatt sales in limbo due to legal catch
The government’s move to sell Hilton and Hyatt Colombo Hotels will likely be postponed till an amendment to a vital piece of legislation is made, according to Attorney General’s (AG) Department sources.
Fifteen local and foreign companies responded to the Ministry of Public Enterprise Development’s call for Requests for Proposals (RFP) to act as the transaction advisor (TA) in the scheduled divestment process for the Hilton and Hyatt Colombo Hotels, the Ministry announced last month. They had called for proposals in early January. “There is an issue in selling these state assets because the Underperforming Enterprises Or Underutilised Assets Act 43 of 2011 where Hilton and Hyatt comes under doesn’t provide for any legal provision to sell these hotels,” an AG Department source told the Business Times. He added that Act has to be amended for the RFP to be finalised. He noted that the Ministry of Public Enterprise has requested the AG for a written clarification on this and they are on it now.
With the clarification, the Ministry will report to the Cabinet which will then decide on repealing the Act which is anyway a proposal in the 2018 Budget, the AG Department source added. For the TA, 11 investment banking units and companies and four local investment banking and accounting companies had applied. It was unclear whether they will be notified of this latest legal catch.
The shortlisted entities were to be offered the chance to enter a competitive bid, on a special board of the Colombo Stock Exchange (CSE), to purchase the 51 per cent stake introduced on an ‘all-or-nothing’ basis. The CSE was reviving the ‘All Or Nothing Board’, a mechanism that is used on a buy or sell a (large) parcel in its entirety at an open auction. The balance stake at Hilton was intended to be released to the general public through an Offer for Sale on the CSE after allocating some shares to employees. The Government was to offer 100 per cent of the shares held in the Grand Hyatt owner, Canwill Holdings (Pvt) Ltd which in turn is owned by SLIC, LGL and EPF to a qualified and reputed investor selected through a competitive process.