ODEL PLC yesterday announced a significant change of ownership, with Parkson Retail Asia Limited, a Malaysia based department store chain, agreeing to purchase a 41.82 per cent stake in the company for Rs 1.424 billion.
A filing to the Colombo Stock Exchange by the company said the transaction would be followed by a mandatory offer to minority shareholders and a 1 for 1 Rights Issue that will raise Rs 2.899 billion in capital for the expansion of the 22-year old fashion retail brand.
Parkson has entered in to a Share Sale and Purchase Agreement with the controlling shareholders of ODEL, the company’s founder and CEO Otara Gunewardene and her brothers Ajit and Ruchi Gunewardene to acquire 60,625,000 shares of ODEL, representing 27.88 per cent, 13.6 per cent and 0.34 per cent respectively of the issued share capital of the company at Rs 23.50 per share, the filing said. Shares of ODEL was in the upward move in anticipation of this transaction, and the share shot up to Rs.23 from Rs.17 during the last couple of days.
Following the acquisition, Otara Gunewardene will retain a 27.88 per cent stake in ODEL PLC as opposed to her previous holdings of 56 per cent, and will continue to be the company’s CEO, a spokesman for ODELsaid.
Meanwhile, the directors of ODEL PLC have resolved, subject to regulatory and shareholder approval, to undertake a rights issue of one (1) ordinary share for every one (1) ordinary share held at a price of Rs. 20 per share after the completion of the mandatory offer.
The total number of shares to be issued is 144,950,000 ordinary shares, doubling the number of shares in issue post rights to 289,900,000 ordinary shares. Parkson and Otara Gunewardene, Ajit Gunewardene and Ruchi Gunewardene have committed to take up their full entitlement of shares in the Rights Issue.
The principal shareholders have also undertaken not to accept the mandatory offer that will be triggered by the transaction.
The proceeds of the Rights Issue amounting to Rs 2.899 billion are to be utilised in the company’s future investments in retail spaces.
In a statement to media, Otara Gunewardene said: “The acquisition by Parkson Retail of a significant ownership in ODEL marks a new chapter in the evolution of the company. Being part of a 22-year journey from a business I started from the boot of my car to becoming part of an international retail company is a great privilege. I am also happy to play a role in an infusion of foreign direct investment to Sri Lanka, while raising capital for the company’s growth.”
“For our customers, employees and shareholders, this development represents exciting new prospects as the ODEL brand will have more opportunities to maximize its potential and together with Parkson to explore new avenues to add value to the company.”
Listed on the Main Board of the Singapore Exchange in November 2011, Parkson Retail Asia Limited is a Southeast Asia-based department store operator with an extensive network of 54 department stores -- 38 in Malaysia, eight in Vietnam and eight in Indonesia -- an aggregate of approximately 554,000 square metres of retail space. Sales in the last financial year topped S$851.6 million, while profit before tax was S$51.6 million. The Parkson Retail Group Ltd., listed on the Hong Kong Stock Exchange operates another 46 owned and six managed stores covering 31 major cities in China with an aggregate of 267,000 square meters of retail space.
Acknowledged as Sri Lanka’s definitive upmarket fashion retail brand, ODEL commenced operations with a single store at Dickman’s Road in 1990 and has grown to 15 stores, including the flagship department store at Alexandra Place and two new-concept ‘Luv SL’ stores. The company posted sales of Rs 3.8 billion and a post-tax profit of Rs.202 million for the 12 months ending 31st March 2012.
In July 2010, ODEL became the first fashion retail business to be listed on the Colombo Stock Exchange with an IPO of 16.7 million shares, an 11.52 per cent stake in its equity.