PMF abandons merger as company seals deal to infuse capital

16 January 2019 09:58 am - 0     - {{hitsCtrl.values.hits}}

A A A

A possibility of a merger explored between People’s Merchant Finance PLC (PMF) and People’s Leasing & Finance PLC (PLC) was abandoned last week, as the former closed a deal with an investor to infuse fresh capital followed by a rights issue which will put the company’s core capital on top of Central Bank’s minimum requirement. 


PMF was transferred to the Colombo Stock Exchange’s (CSE) Watch List effective from July 17 last year, due to a modified audit opinion issued on the company’s financials for the year ended March 31, 2018  in connection to a going concern matter.  PMF fell short of the Central Bank’s minimum capital requirement to operate as a licensed finance company as the company saw significant capital erosion amid continued losses. 

 

However, the company last week announced that it struck a deal to issue 19.98 percent stake of the company or 16.85 million shares at Rs.9.50  each to Sterling Capital Investments (Private) Limited. 


The company has also resolved to issue 126.525 million shares by way of 3 for 2 rights issue, inclusive of the private placement shares at a price of Rs.9.50 a share. Both share issues would infuse a capital of Rs.1.362 billion and is subject to CSE’s approval of the proposed share issues in principal and obtaining shareholder approval at a general meeting. 


PMF’s current stated capital of Rs.1.078 billion and the planned capital infusion would place the company’s core capital significantly over the minimum stipulated capital of Rs.1.5 billion by the Central Bank. 


A fortnight ago Central Bank Governor, Dr. Indrajith Coomaraswamy issued a broadside on finance company and bank heads that he would be “brutal” on anyone who falls short of the minimum capital. 


Such companies would face suspension of business in terms of raising deposits and giving loans and would face revocation of licenses. 


For over a year, PMF was vacillating on a possible merger with PLC which owns 37.06 percent in the company and inviting a strategic investor to sort out its capital issues. State-owned People’s Bank has 50.16 percent in PMF being its largest shareholder. 


At the close of trading on Monday, PMF share was trading at Rs.10.00. 


During the six months ended September 30, 2018 the company lost little under Rs.3.0 million,  narrowing from the loss of Rs.67.4 million it incurred during the same period last year. 


The company has an asset base of Rs.3.4 billion but the net assets have been dwindling due to continuous losses.  In 2018, the company was also reprimanded by the CSE for its non-compliance with corporate governance requirements related to the minimum number of independent directors. 


The company in July chose to be transferred in to the Diri Savi Board due to its failure to comply with the minimum public shareholding, to remain in the Main Board.

 

 

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

  Comments - 0

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

 

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




H&M labels dumped in Nature Reserve

A group of volunteers during a clean-up of the Wetahirakanda Nature Reserve h

Employees’ health and safety our top-most priority - Brandix

When inquired, Brandix Apparel Limited said that health and safety of employe

“Workers who fainted had water sprinkled on their faces and had to work again”

Health authorities believe the first reported Covid-19 infected worker from t

“Social media ruined us” - husband of Minuwangoda Brandix factory worker

The Minuwangoda Brandix factory worker who first tested positive for Covid-19

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.