Sri Lanka to divest luxury hotel firms after port sale

Sri Lanka yesterday announced plans to sell off two state-owned luxury hotel companies following its billion-dollar privatization of a lossmaking port.

Government spokesman Rajitha Senaratne said ministers approved the seeking of bids for a 51 percent stake in Hotel Developers (Lanka) plc, whose luxury hotel in Colombo is managed by Hilton.

He did not give a value for the company, which occupies prime land in the heart of Colombo. The government will also sell all of Canwill Holdings (Pvt) Limited, which owns a 49-floor building that will operate as Grand Hyatt Colombo once construction is completed.

Canwill is currently incorporated as a private company, but its equity is held by three state entities-the country’s main insurance company and its subsidiary and the main pension fund.

Last year the insurance company valued the hotel property at over $240 million. The latest announcement came four days after the government sealed a $1.12 billion deal to let a Chinese state firm take over the southern port of Hambantota. The loss-making port straddles the world’s busiest east-west shipping route. It will now be jointly managed by the state-owned Sri Lanka Port Authority and China Merchants Port Holdings.

Sri Lanka has said it wants to reduce its crippling foreign debt with the proceeds of the Hambantota port deal, and is selling off some other enterprises to raise revenue.

International ratings agency Moody’s has said the port deal was credit-positive for Sri Lanka and could help the island reduce its debt servicing and build foreign reserves.

Colombo’s plans to sell its white elephant national carrier, Sri Lankan airlines, has stalled due to lack of investor interest. Sri Lanka secured a $1.5 billion bailout from the IMF last year after facing a balance of payments crisis.