16 May 2019 12:00 am
The Central Bank yesterday extended the suspension on the troubled non-banking financial institution, The Finance Company PLC (TFC), to consider the business restructuring proposal submitted by the company.
Accordingly, the Central Bank extended the suspension of accepting new deposits, withdrawal of deposits and disbursement of loans for the firm, by another three months from yesterday.
The Central Bank assured the depositors that the interest due on deposits would be paid without disruptions.
TFC was severely impacted by the failure of a number of financial institutions within the Ceylinco group in 2008 and its financial status deteriorated since then, coupled with severe liquidity issues.
The Central Bank this February appointed an expert panel in banking and finance to facilitate the restructuring process of TFC as the previous efforts in identifying prospective investors and restructuring of the company had failed. The management of TFC earlier stated that the company was seeking a strategic investor/s who could invest US $ 125 million as a special private share placement to turn around the firm within two years. The firm’s total assets had declined to Rs.14.4 billion at the end of the third quarter, compared with the beginning of the year, when the company had a total asset base of Rs.23.5 billion. The firm’s net asset value per share was a negative Rs.106.5, as at December 31, 2018, compared to a negative net asset value per share Rs.90.24, at March 31, 2018.
High-net-worth investor Dr. T. Senthilverl held 11.79 percent shares of the firm at the end of last year.
According to the Central Bank, 93 percent of TFC depositors are holding deposits below Rs.600,000, hence their full deposit is eligible to be paid back under the deposit insurance and liquidity support scheme, in case of a liquidation.