Instead of buying the two floors of the World Trade Centre Building as planned, Overseas Realty (Ceylon) PLC (ORCL) yesterday said they would purchase the shares of the company which owned the floors, perhaps to qualify for a tax break offered by the country’s investment promotion body.
The company, the owners of the WTC, last year received shareholder approval to raise Rs.976.6 million through a rights issue to acquire two floors of the WTC, which belonged to Shing Kwan Investments (Private) Limited (SKIL), a wholly owned subsidiary of Shing Kwan Investment (Singapore) Ptd Ltd, the majority owners of ORCL, for a consideration of Rs.762.3 million.
ORCL is a Board of Investments (BOI) approved company and enjoys concessionary income tax benefits in respect of the profits earned by leasing the flows owned by it.
But the company in filing to the Colombo Stock Exchange yesterday said that they had been intimated by the BOI that the two 36th and 37th floors that they were planning to acquire would not be entitled to concessionary tax benefits.
“Subsequently the board decided to proceed with the acquisition of the above two floors by purchasing shares/indebtedness of SKIL after obtaining requisite clarifications/regulatory approvals,” the company said in its filing.
Accordingly, ORCL will purchase the shares of SKIL in its entirety and thereby will hold SKIL as its fully owned subsidiary.
ORCL said in response to the application made to the Exchange Control Department for the company to remit the funds overseas for the acquisition of the SKIL shares, a letter granting approval was received on April 07, 2016.
The company said the value of the deal has slightly changed to Rs.763.5 million due to the lapse of one year from the date of last valuation.