Legal dispute over Sheraton Colombo property, premises
The Sheraton Colombo hotel premises and its properties are to be sold by public auction following a default in making payments on loans obtained from two commercial banks. But the hotel owner states that negotiations are currently underway with the banks.
People’s Bank and the National Development Bank (NDB) have announced, in newspaper advertisements, the sale by public auction of the property and premises of the Sheraton Colombo owned by Lanka Hotels and Residencies as a result of the default in making the necessary payments to the loans obtained.
Lanka Hotels and Residencies Chairman Gamini Gunaratne speaking with the Sunday Times Business said that currently “we are negotiating with the banks”.
He noted that the public announcement is part of the legal procedures that the banks have to adhere to.
However, he noted that they hope to arrive at a settlement with the banks on the amount that has to be paid.
The negotiations between the banks and the company revolved around the amount that needs to be paid by the company to the bank.
Mr. Gunaratne said, “Our intention is to settle it once we agree with the banks on the final amount to be paid”.
The management of the Sheraton Colombo is given under a contract to the global Sheraton Hotels franchise.
The announcement by the two state banks indicate that Lanka Hotels and Residencies has made a default in payments on Primary Concurrent Mortgage Bonds bearing No. 1640 dated 10th January 2017 and No. 1832 dated 15th November 2019.
The total due to People’s Bank as stated in the advertisement is US$2.2 billion which comprisses a capital sum of US$14.7 million and the accrued interest of US$8.1 million upto 10.12.2025; and a total sum of Rs.2.2 billion which is made up of capital sum of Rs.1.1 billion and the accrued interest Rs.1billion upto 10.12.2025 on the said bonds and further interest from 11.12.2025.
The total due to the NDB as stated in the notification is the sum of Rs.2.2 billion and US$23 million.
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