FLCH to set up two boutique hotels

Free Lanka Capital Holdings Ltd.(FLCH), a plantation and power sector company plans to set up three-star-class boutique hotels at its Pussellawa Plantations in Girigama, Kandy and Ayr, Padukka, said a top official at a ceremony to launch the company’s IPO on Tuesday.

He said Tea Leaf Resorts Holdings (Pvt) Ltd., a subsidiary of FLCH will own and manage the two hotels and the lands will be sub-leased from Pussellawa Plantations Ltd.

The hotels will comprise 92 rooms and will be developed to three-star class establishments.

The project is expected to cost Rs. 800 million and will be jointly undertaken by FLCH, Sierra Cables PLC and Pussellawa Plantations Ltd with equity contributions of 40, 40 and 20 percent while the balance funds will be raised by way of bank borrowings.

He said Rs. 250 million of IPO funds allocated for the project would represent 40 percent equity contribution of FLCH. Work on the project is expected to commence next month and commercial operations of the hotels are expected to start in November 2012.

FLCH has planned to develop a commercial property complex in Borella with proceeds of the IPO. The complex will comprise 80,000 sq.ft of rentable space.

“Rs. 600 million will be allocated from the Offer for the project which will commence this year”, he said.

The Offer for subscription is 300,000,000 ordinary shares priced at Rs.5 a share to raise Rs.1.5 billion. The opening of the subscription list will be on March 17. Managers to the issue are Taprobane Holdings Ltd and John Keells Capital of John Keells Holdings.

FLCH owns Maturata and Pussellawa Plantations and manages over 23,000 hectares of tea and rubber comprising 43 estates. The company plans to expand rubber production due to the vast potential of the sector.

- LF