Two Lankan plantation firms borrow abroad from parent

24 May 2017 10:23 am - 0     - {{hitsCtrl.values.hits}}

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Sri Lanka’s plantation firms with their parents in the U.K. have borrowed in US dollars to enjoy cheaper interest costs.
According to a disclosure filed with the Colombo Stock Exchange, Hapugastenne Plantations PLC and Udapussellewa Plantations PLC have collectively borrowed US $ 3.4 million from its parent,  James Finlay Limited in the United Kingdom.  
The companies said the funds were borrowed for the purposes of working capital, field development and other capital expenditure planned for 2017. 

Under the external commercial borrowing scheme, Hapugastenne Plantations PLC borrowed US $ 2.2 million, of which a US $ 1.75 million was as a new loan for 3 years at 3 months LIBOR plus 3.5 percent per annum and US $ 450,000 for 2 years at 4.5 percent per annum as a renewal of an existing loan with James Finlay Limited.  Meanwhile, Udapussellewa Plantations PLC borrowed US $ 1.2 million, of which US $ 0.8 million was as a new loan for 3 years and US $ 0.4 million for 2 years was as a renewal of an existing facility at similar rates.
Apart from enjoying lower borrowing costs, these plantation firms could also hedge the possible foreign currency risk of their facilities and debt servicing as they received their income mostly in dollar terms resulting in a natural hedge.

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