23 October 2017 10:06 am
Watawala Plantations PLC (WATA) has spun off its tea segment operations from its palm oil business—a move the holding company has been planning from the beginning of the financial year 2017/18. WATA earlier said its operating assets and liabilities of upcountry tea business segment would be vested under newly formed entity, Hatton Plantations Limited.
As at September 30, 2017, WATA shareholder were issued with Hatton Plantations shares at a reference price of Rs.7.62 per share for each WATA ordinary share they held. At the end of the last week’s trading, Watawala share ended 10 cents or 0.33 percent higher at Rs.30.
As of June 30, 2017, Estate Management Services (Pvt) Limited held 75.65 percent stake in Watawala Plantations while the high net worth investor, Dr.T. Senthilverl held another 10.10 percent stake being the second largest shareholders of the company.
The unbundling of the two businesses will enable Watawala Plantations to keep its problem child at a distance.
However, the shareholders will like to see a new management team focusing fully on reviving the ailing tea business under the new structure.
Changing weather conditions, labour related issues and instability in key markets have contributed to the decline of Sri Lanka’s tea market.
Hatton Plantations is now seeking a listing in the Colombo Stock Exchange via an introduction, and shares should begin trading from early next month, according to people familiar with the arrangements.
Besides, tea and palm oil, Watawala Plantations also has a dairy subsidiary, Watawala Dairy Limited and is also engaged in exporting of tea, cinnamon and timber.
During its first quarter ended in June 30, Watawala Plantations group reported a net profit of Rs.379.3 million or Rs.1.59 a share, up 58 percent over the same period last year.