John Keells Holdings PLC (JKH) has announced a Rights Issue of ordinary shares, followed by a share sub-division.
This initiative is aimed at boosting the company’s financial stability and ensuring the successful execution of its ongoing and future projects.
The Board of Directors of JKH resolved to recommend to shareholders the issuance of 150,263,595 new ordinary shares. These shares will be offered on a 1-for-10 basis at a price of Rs. 160 per share, potentially raising Rs. 24,042,175,200. The new shares will rank pari-passu with the existing shares.
The proceeds from the Rights Issue are earmarked for the funding requirements of Waterfront Properties (Private) Limited (WPL), a subsidiary of JKH. WPL is the developer behind the ‘City of Dreams Sri Lanka’ integrated resort project, formerly known as ‘Cinnamon Life Integrated Resort’.
The funds will address the higher-than-anticipated equity funding needs due to delays in the project’s cash flow generation, including postponed gaming operations.
JKH has secured a partnership with Melco Resorts and Entertainment Limited, a leading casino and integrated resort operator. Melco has committed approximately $ 125 million for the fitting out and equipping of the gaming space within the project.
This partnership follows the publication of new regulations governing casino licensing, ensuring a structured and transparent framework.
The ‘Cinnamon Life’ hotel, along with its restaurants and banquet facilities, is slated to open in October 2024. The gaming operations and retail mall will commence in phases, with overall completion expected by mid-2025.
In conjunction with the Rights Issue, JKH’s Board of Directors has also proposed a sub-division of shares. Post-Rights Issue, each existing ordinary share will be subdivided into ten new shares, increasing the total number of shares from 1,652,899,552 to 16,528,995,520, assuming full subscription to the Rights Issue.
This sub-division aims to enhance liquidity and make the shares more accessible to a broader range of investors. It will not affect the company’s stated capital.
Both the Rights Issue and the share sub-division are contingent on approvals from the Colombo Stock Exchange and JKH shareholders at an upcoming extraordinary general meeting.
Additionally, adjustments will be made to the outstanding convertible debentures issued by JKH to HWIC Asia Fund to reflect the impact of these corporate actions.