Sim Leisure Group has entered into an addendum to the shareholders’ agreement with Elpitiya Plantations and Escape Sri Lanka, the joint venture (JV), to amend certain terms on Dec 23.
In the original SHA, Elpitiya will sublease a plot of land to Venture Valley. The latter will construct and operate ESCAPE Sri Lanka with Sim Leisure’s expertise.
In the new SHA, the estimated project cost of ESCAPE Sri Lanka is now at US$2 million ($2.7 million) from US$4 million previously.
The funding for the ESCAPE Sri Lanka project and share capital contribution in the ESCAPE JVCo by the parties is US$2 million. The sum was US$1.6 million previously by way of contribution in the share capital of the ESCAPE JVCo in addition to the balance through debt funding. In the previous SHA, both parties agreed to “provide reasonable security proportionate to their shareholdings”.
Under the new SHA, Sim Leisure Group will subscribe to and be issued 500,000 new shares in the JV, or a 25% stake, for a contribution of US$500,000. This is compared to the previous SHA where Sim Leisure Group will subscribe to and be issued 816,000 new shares in the JV, representing a 51% stake, at US$1 per share.
In the new SHA, Elpitiya will subscribe and be issued 1,500,000 new JV shares representing a 75% interest, up from the previous 784,000 new shares representing a 49% stake. Again, the shares are priced at US$1 apiece.
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Elpitiya will also have the right to call upon the company to purchase such JV shares up to the proportion of 51% shareholding in the ESCAPE JV Co (put option).
Other changes include the first chairman of the JV having a three-year term, up from the previous term of two years.
With the new SHA, Sim Leisure’s estimated aggregate value of consideration is around US$1.02 million. The value may vary in future depending on the timing of the exercise of the put option by Elpitiya and the gross asset value of the ESCAPE JV Co.
Shares in Sim Leisure closed flat at 26 cents on Dec 23.