Sea Pearl’s future uncertain in the face of high debt

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The auditor said that Sea Pearl’s total debt amounted to Tk 462.57 crore, including bank loans and bonds, which represents 78.72% of its equity and liabilities.

October 17, 2021, 10:00 p.m.

Last modification: October 17, 2021, 10:07 PM

Sea Pearl Beach Resort & Spa Limited (the owner of “Royal Tulip”) a five star resort and hotel in Bangladesh.

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Sea Pearl Beach Resort & Spa Limited (the owner of “Royal Tulip”) a five star resort and hotel in Bangladesh.

Sea Pearl Beach Resort and Spa Limited, a five-star hotel in Cox’s Bazar, faces an uncertain future due to its high debt ratio, which measures the degree to which the company finances its operations through debt relative to the exclusive property funds.

Uncertainties regarding the future of the company also result from its non-payment of the bond and the decrease in capacity utilization, said independent auditor “Kazi Zahir Khan & Co” in the audit report of the company for the year 21.

In his qualified opinion, the auditor stated that the total debt of Sea Pearl amounted to Tk 462.57 crore, including bank loans and bonds, which represents 78.72% of its equity and of its debts. In addition, he has not paid the regular payment of the bonds since April 2020.

In addition, the capacity utilization of the company is low and it decreased by 9.21% compared to the previous year. The total use of the achievable capacity of the company is only 44.28% in the last financial year, compared to 53.49% in the previous year. All of these factors indicate that uncertainty is an ongoing concern, the auditor said.

Sea Pearl Beach Resort general manager Aminul Hoque could not be reached by phone for comment on this matter.

Responding to the auditor’s opinion in the report, the company said its capacity utilization deficit was a result of the Covid-19 lockdown and the increase in the company’s achievable capacity. But the company did not comment on the other indicators.

Despite the auditor’s concerns about the company’s future, in FY21 its revenue jumped 40% to Tk 64.39 crore, the highest since its inception. Its net profit was Tk 7.36 crore.

Meanwhile, the company announced the start of a new cruise package business on the Khulna-Sundarban-Khulna route. To this end, they will purchase two cruise ships with an estimated cost of Tk 8.50 crore.

The company operated under a franchise agreement, signed on June 1, 2014, with the Netherlands-based five-star hotel and resort operator GT Investments BV. They manage the hotel and resort industry under the “Royal Tulip” brand. It started its commercial operation in September 2015.

The company began building the hotel in Cox’s Bazar with a bank loan. They later issued a bond worth Tk 325 crore with an interest rate of 10% to repay the bank loan. They issued the bond for eight years, including a two-year moratorium period.

The annual installment payment of the bond began in 2017. The Investment Corporation of Bangladesh was the sole investor in the bond.

In addition, the company raised Tk 15 crore through an IPO in 2019 for the expansion of its business.

They only paid a 5% stock dividend to their shareholders during the first year of its stock market journey. The following year, they paid 1% in cash due to a commercial slump for Covid-19. For the last fiscal year, they recommended the same dividend for shareholders.

At present, it is traded under category “B” on the exchanges. Its share price closed at 45.20 Tk on the Dhaka Stock Exchange on Sunday.


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