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Two Lankan plantation firms borrow abroad

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25 May 2017 12:00 am - 0     - {{hitsCtrl.values.hits}}

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Sri Lanka’s plantation firms with their parents in the UK 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 their 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 three years at three months LIBOR, plus 3.5 percent per annum and US $ 450,000 for two 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 three years and US $ 0.4 million for two 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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