• Cabinet re-appoints Deloitte Touche Tohmatsu India as Transaction Adviser
• Treasury Secy. confirms process could restart or resume from suspended stage
• Around $ 120 m needed to complete stalled 47-storey Grand Hyatt Colombo project
• Divestiture seen as only viable option amid financing constraints, past controversies

The Government is awaiting the advice of its re-appointed Transaction Adviser, Deloitte Touche Tohmatsu India LLP on whether the divestiture process of Canwill Holdings Ltd. should commence afresh or proceed from the stage it had reached prior to its suspension following the change of government. 

Speaking to The Sunday Morning Business, Treasury and Ministry of Finance, Planning, and Economic Development Secretary Dr. Harshana Suriyapperuma stated that in terms of the Cabinet decision dated 27 May, the Cabinet of Ministers had resolved to resume the suspended divestiture process of Canwill Holdings. 

Canwill Holdings is the holding company of Sino Lanka Hotels & Spa Ltd., which was established to implement the Grand Hyatt Colombo project.

He further revealed that the Cabinet had also decided to re-appoint Deloitte Touche Tohmatsu India as the Transaction Adviser, in line with the divestiture process commenced by the previous regime.

“We are calling for the best investment option. The plan is to package it in such a way through a very transparent process to invite investors,” Dr. Suriyapperuma stated.

He clarified that the divestiture process initiated by the previous regime had not reached a mature stage and faced certain challenges. Accordingly, the Government has decided to retain the same Transaction Advisers that had been advising the previous regime.

Dr. Suriyapperuma further stated that while the Government viewed this as a continuation of the previously initiated divestiture process, it was awaiting the advice of the Transaction Advisers on whether the process should commence afresh or proceed from the stage it had reached prior to its suspension following the change of government.

He pointed out that it was too premature to comment on the timeline for the divestiture process, adding that they were awaiting the advice of the Transaction Adviser on how to proceed.

“We are awaiting input from the Transaction Adviser. That is our expectation, because we have now handed over that engagement to them and therefore we are guided by their advice. So if they tell us that these are things we should do in order to start immediately, we will follow that advice,” he stated. 

May’s Cabinet decision justified the commencement of the divestiture process, stating: “It is currently estimated that approximately $ 120 million (approximately Rs. 36 billion) will be required further to complete the Grand Hyatt Colombo project.

“Taking into consideration the difficulty in obtaining further funds from the shareholders of the said company or through debt financing to complete the construction of the project, the most appropriate option that has been identified is raising the necessary funds through a process of selling shares of the company and completing the construction of the project and thereafter commencing the commercial operations.”

The Grand Hyatt Hotel project in Colombo, together with its sister project Hyatt Regency Hotel in Hambantota, has been mired in controversy since its inception in 2012. 

While the Board of Directors of Helanco Hotels & Spa Ltd., another subsidiary of Canwill Holdings, decided in 2015 to abandon the project to construct the Hyatt Regency Hotel in Hambantota in the face of allegations regarding financial fraud, the construction of the 47-storey five-star Grand Hyatt Hotel in Colombo featuring 458 guestrooms and 100 serviced apartments continued despite numerous delays and cost overruns.

In July 2020, the previous Government established a new real estate and property development company called Selendiva Investments Ltd. with the intention of restructuring and transforming underperforming and underutilised State-owned assets to their full potential via appropriate Public-Private Partnership (PPP) investments. 

Accordingly, several key State-owned real estate assets including Canwill Holdings and its subsidiaries were to be vested in Selendiva Investments and the previous Government announced in December 2020 that construction of the Grand Hyatt Hotel in Colombo would be completed by the end of 2022.

However, these plans were later abandoned by the previous Government during the economic crisis and it was reported that steps were being taken to wind up Selendiva Investments.