Raigam Salterns proposes Rs.536mn rights issue to acquire related company

Raigam Wayamba Salterns PLC, a salt-based product manufacturer and exporter, said it was planning to raise Rs.536 million through a rights issue to acquire a similar business currently owned by its parent. 

To this end, the board of directors has resolved to issue over 282.2 million new ordinary voting shares to its existing shareholders on one-for-one basis—one new share for each existing share—at a price of Rs.1.90 per share.

The current stated capital of the company stands at Rs.604.4 million comprising 282,207,320 shares. 

With the rights proceeds the company plans to acquire Raigam Eastern Salt Company Private Limited operating a similar business owned by Raigam Marketing Services Private Limited, the parent company of both the companies for a consideration of Rs.535 million. 

The transaction is subject to obtaining shareholder approval at a general meeting of the company.
The rights issue is subject to the Colombo Stock Exchange approving in principle and shareholder approval at a general meeting. 

The Annual General Meeting (AGM) of the company is scheduled to take place on September 29.
For the quarter ended June 30, 2016, the company posted a consolidated net profit of Rs.21.5 million on the back of a top line of Rs.135.4 million. 

The earnings per share improved to eight cents from three cents. 

As at the same date, Raigam Marketing Services Private Limited, Raigam Distributors Private Limited and Group Chairman Ravi Liyanage collectively held 71.84 percent of the company.

State-controlled private sector pension fund, the Employees’ Provident Fund, as the third single largest shareholder held 13.49 percent. 

The company, riding on the war victory in 2009, went public in 2010 through a Rs.200 million initial public offer, offering Rs.2.50 a share.