None of the depositors of the beleaguered finance company, Central Investment and Finance Company PLC (CIFL), who met at New Town Hall yesterday, endorsed the Central Bank (CB)-approved restructuring plan, according to the Depositors’ Association.
A member of the Depositors’ Association told Mirror Business that they did not agree with the plan because they felt it was a dubious document just to leave thousands of hapless deposit holders in the lurch.
“Nobody agreed to convert 60 percent of their deposits to shares because we feel it was way too high,” he said on condition of anonymity.
According to him, the depositors have been presented with a document which has no details about the price at which the shares will be converted.
“No one has even signed the plan. How can we approve a plan which nobody has signed? They have not given a clear definition on the 60 percent share conversion or the share price. How can we approve a document which is not clear and which nobody has put the signature?” he lamented.
There have been about 1,000 deposit holders at the meeting. The company has approximately 5,000 deposit holders in total.
“They (CIFL) expect our approval for an open document with no clear information so that they could make changes in favour of them at the expense of the depositors,” he expressed suspicion.
The depositors, who resorted to a protest soon after their meeting, said the CB was totally accountable for the debacle because CB knew the fragile nature of the company very well but kept mum without making it public until it turned into a disaster.
“The funny thing was, just four days to declining any financial support to bail out any failing finance company as a policy by the CB, they came up with liquidity support. That is also sufficient to meet only up Rs.400 million worth of deposits,” he said.
Asked if the depositors would prefer the other alternatives of liquidating the company assets to settle their Rs.3.4 billion worth of deposits in the company, he said depositors would like to see the company back on its feet again with prospects of a capital infusion.
“We should find an investor and run the company but not with the 60:40 percent conversion.
We would also like to become flexible for a certain extent if the ratio could be brought down,” he remarked.
CIFL Non-executive Director Lakshman Rupasinghe recently disclosed of their negotiations with a few international and local investors to infuse at least Rs.1.0 billion capital. However, any prospects for a new investor coming with Rs.1.0 billion will be on the condition of at least 60 percent of the deposit base being converted into non-voting shares.
“Being the largest shareholders with 60 percent stake, what’s the point of having non-voting shares with no voice being made,” he asked.