The Central Investment & Finance PLC’s (CIFL) Depositors Association recently agreed to a repayment plan for their deposits at the troubled finance company submitted by the Swiss firm Chancental Works GMBH with the intervention of the Central Bank of Sri Lanka.
Chancental Works is proposing to initially invest Rs. 1.1 billion in a new company. The Swiss firm is planning to convert 15 percent of each deposit in CIFL into warrants in the new company with a guaranteed buyback scheme within three months after the new company is established. A further 10 percent each of deposit values are to be paid back to depositors by March 31, 2018 and March 31, 2019, and 15 percent of a deposit will be paid by September 30, 2019.
Chancental Works is offering to pay 8 percent interest on the balance 50 percent of a deposit and is expecting to pay off the entire deposit within four years.
At the end of June 30, 2013, CIFL had Rs. 3.2 billion in deposits and Rs. 459 million in accumulated losses.
Last year a German investor had proposed to bail out the CIFL depositors but had then exited. Following a news report from state media last week that the Swiss party too is looking at exiting, the CIFL Director Board said that it has not yet received such information from the Central Bank.
The Central Bank became the custodian of CIFL and appointed a new board of directors after CIFL ran into financial trouble in 2013 and its former Chairman Deepthi Perera went into hiding in Cambodia for two years after it was alleged that he defrauded CIFL depositors.
He was arrested upon return to Sri Lanka and bailed out in 2015, and legal proceedings are ongoing. (CW)