Galadari debt to be converted to shares @ Rs 22.50

Jeremy · 1 Galadari debt to be converted to shares @ Rs 22.50 Mon Jul 30, 2012 9:28 am

Jeremy

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Board has in principal granted the approval to convert the debt of Galadari Hotel to Ordinary shares at a price of Rs 22.50

What would be the impact of this to the GHLL share price?
http://www.cse.lk/cmt/uploadAnnounceFiles/1051343301087_541.pdf

enthush

enthush

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GMNet wrote:Board has in principal granted the approval to convert the debt of Galadari Hotel to Ordinary shares at a price of Rs 22.50

What would be the impact of this to the GHLL share price?
http://www.cse.lk/cmt/uploadAnnounceFiles/1051343301087_541.pdf

Even at the last EGM and AGM shareholders were silent on the conversion. They seemed to silently agree without being aware of hte consequences that conversion was the only way out, which is quite true but ignored the losing the perceived wealth of the existing shareholders. to my knowledge these are the problems.
1. why convert at 15.26 (revised due to resistance)
Lower the conversion price higher the new number of shares issued, thus more wealth of the existing shareholders will be shared with the ex-creditors.

2.On what grounds GHLL decided that price is the intrinsic value, and independance of valuation. By doing that they believe GHLL share was overvalued (technically yes) at the time of the announcement of conversion price.(somewhere in October/2011).how about the alternative value of the property,,there will be enough and more prospective buyers.

3.If Rs.15/Rs.22.50 was the value of a share, why did the Galadari brothers sell their shares to a Dubai government based company at Rs.40?

4. Anyonme can say its a negotiated deal...ok then why we let the debt by Galadari brothers be converted at a much very much lower rate? How ethical was that Galadari Brother being a related party SOLD at Rs.40 and BUY at Rs.15.26/22.5?

5.After conversion, their only way to survival is renovation for which they have to borrow largely at much higher commercial rates which will be more or less as detterent as the currnt foreign exchange loss.

Thus, I beleive if GHLL at any point could borrow at favourable rates advisably from foreign sources there is hope.