Kalpitiya Beach asked to postpone EGM, give better explanation on IPO money
COLOMBO (EconomyNext) – Sri Lanka’s capital markets watchdog asked Kalpitiya Beach Resort to postpone a shareholders’ meeting, saying it needed to come up with a more “precise” explanation on what it will do with funds raised from the public.
Kalpitiya Beach Resort had called an Extraordinary General Meeting next Friday (May 8) after it was ordered to do so by the Securities and Exchange Commission (SEC) to explain what happened to 283.5 million rupees raised in an Initial Public Offer in November 2011.
The funds were to part finance building Citrus Kalpitiya, a resort hotel, on the north-west coast.
Construction was to have been started by December 2011 and completed within 24-30 months with commercial operations of the hotel scheduled to start in early 2015
The SEC said in a statement it requested Kalpitiya Beach Resort PLC to postpone the scheduled EGM by another month.
“This was to enable the company to come up with a precise direction on the future course of action on how the company proposes to safeguard the minority shareholder interests prejudiced by the delays caused in constructing the resort hotel, Citrus Kalpitiya,” it said.
The SEC made the request from the company after perusing the circular issued to the shareholders of Kalpitiya Beach Resort following the SEC directive.
“ . . . the SEC was of the opinion that the alternate courses of action stated in the circular to the shareholders lacked specific direction with regard to providing adequate recourse to the minority shareholders in respect of their investment,” the statement said.
Kalpitiya Beach Resort, in a stock exchange filing on April 16, blamed government delays in developing Kalpitiya as a tourist destination for its failure to build the hotel and said it was considering an alternative location.
The SEC said Kalpitiya Beach Resort was requested by the SEC that in the event the company is “unable to rectify the issues in respect of the construction of the hotel, it is required to propose a viable alternate scheme to redress the shareholders who have been prejudiced by the failure of the company to carry out its objectives as stated in the prospectus.”