Spotlight turns to Kalpitiya Beach Resort PLC – an EGM to be held in May

Spotlight turns to Kalpitiya Beach Resort PLC – an EGM to be held in May

Spotlight turns to Kalpitiya Beach Resort PLC – an EGM to be held in May

Written by Staff Writer

16 Apr, 2015 | 9:55 pm

Kalpitiya Beach Resort PLC has convened an Extraordinary General Meeting to be held on May 8 to appraise shareholders on the current position of the company and an alternate course of action with regard to the Citrus Kalpitiya Hotel Development Project.

This follows a directive from the Securities and Exchange Commission which was issued on March 20.  In the directive issued on March 20 this year, the SEC noted that Kalpitiya Beach Resort PLC had raised 283.5 million rupees from the public in November 2011, with the funds intended to finance the construction of Citrus Kalpitiya as stated in the prospectus. The directive, was triggered by what was termed by the SEC as an “inordinate delay” in the construction of the hotel.

The SEC points out that in a previous disclosure, the company had also stated the construction of the resort would commence from December 2011, with commercial operations commencing in early 2015. The directive from the SEC expressed “grave concern” over the company’s failure to complete construction within the time-frame specified in its prospectus. The SEC directed the company to pass a resolution specifying an alternative course of action with regard to funds collected through the IPO on or before the 10th of May 2015.

It is against this backdrop that the Company issued notice yesterday of an EGM to be held on  May 8, 2015.

In the proposed resolution, the shareholders could agree to consider courses of action including –

1. Await the new government’s vision and intent to implement the development plans for Kalpitiya with clear time lines so that the company may review the appropriate time to commence the project.

2. Continue to explore possible investor interest that would negate externalities, so that the company would not be dependent on Kalpitiya destination development as promised in the past by the government.

3. Consider partners who would create unique marketable products that will further ensure occupancy as a standalone hotel such as a golf course and theme parks.

4. To explore the feasibility of an alternative location, within Sri Lanka and the Maldives as an alternate destination to Kalpitiya for a tourism project.

A google search for Kalpitiya Beach Resort PLC, would lead you to the website of Citrus Leisure, also a public quoted company. Under the hotels tab, you would find links to Citrus Hikkaduwa and Citrus Waskaduwa, the other two hotels operated by the company, while there is also a non functional link to Citrus Kalpitiya.

Data for Kalpitiya Beach Resort PLC on the website of the Colombo Stock Exchange shows that while the stock price reached an all time high of 24 rupees, at the close of trading today, the stock price was Rs.3  and 90 cents.

In spite of the fact that the SEC notes in its letter that construction was to begin in December 2011, three and a half years later, the satellite image of the area from Google Earth, shows the current state of the property.

Our reporter confirmed that no construction has taken place at the said location.

Investigative Business Journalist Faraz Shauketaly noted that 283 million rupees were raised in 2011 at the time of the IPO which was money that came from small time retail investors resulting in the share price to reach its peak of 24 rupees. Four years later, the company now announces that they plan to look for new investors and or a new location, maybe in the Maldives. This is not what the investors paid for, they invested their money for a project in Kalpitiya. They are now faced with a scenario where the share price is worth only 3 rupees 90. It is now upto the SEC led by Mr. Karunaratne to ensure that the officers of this company are held accountable fully and that the small time investors are taken care of.

When News 1st contacted Prema Cooray, the Chairman of Citrus Leisure PLC, he noted that the Board of Directors had deferred its decision on the Citrus Kalpitiya Project, as Kalpitiya is yet to be developed as a tourist destination.


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