JKH considering scouring capital markets to fund waterfront project
John Keells Holdings (JKH), which intends to continue the Waterfront Properties project as planned despite the new government’s amendment to restrict the ability to rent space for gaming, is contemplating going to the capital market for additional funding, officials said.
This has come on the back of a delay in securing a 7-year syndicated loan to the tune of US$445 million. Last December JKH announced its intent to enter into a syndicated project loan facility with the Standard Chartered Bank to partly finance this US$650 million plus integrated resort project which was backed by the previous government. The company raised more than Rs. 40 billion two years ago from shareholders from a rights issue, that was attached with warrants.
“Some (in the syndicated loan) had withdrawn, but we had roped in others at a higher (pay back) rate,” an official told the Business Times.
Chairman JKH Susantha Ratnayake was quoted in the media recently as saying that the project is progressing well and it has now released the space earlier (for other development) reserved for the casino parlour, under a new government ruling. Prime Minister Ranil Wickremesinghe announced in Parliament that the agreements entered into with Waterfront Properties (Pvt) Ltd under the Strategic Development Act will be amended to restrict the ability to rent space for gaming activities.
Analysts say that if JKH wants a debenture they will need to obtain a rating as per ColomboStock Exchange (CSE). But, the company informed the CSE recently that it’s terminating its rating arrangement with Fitch Ratings on the back of the latter downgrading the company’s AAA rating to AA+, due to the poor performance of its associate company South Asia Gateway Terminal (SAGT). But the company has ideas for an international rating.
“The company believes that a local rating is not warranted at this juncture of time considering the company’s current debt funding sources which are predominantly in foreign currency,” JKH said in a CSE filing.
Construction work has already started on the project on freehold land at Glennie Street in Colombo.