Lankem Ceylon announces Rs.1.2bn rights issue

Lankem Ceylon said its board has approved a rights issue of 17.16 million ordinary shares at Rs.70 per share.

The issue will be offered in the proportion of one new share for every three existing shares, subject to shareholder approval at an Extraordinary General Meeting and the Colombo Stock Exchange’s (CSE) in-principle approval for the listing.

The company’s board said the pricing of the rights issue is fair and reasonable to both the entity and existing shareholders. Proceeds will be used partly to settle dues to a related party and partly to reduce outstanding bank loans.

Lankem’s current stated capital stands at Rs.1.28 billion.

Following the successful completion of the rights issue and assuming full subscription, the company plans to carry out a share subdivision. Each existing share will be split into two, increasing the total number of shares from 68.63 million to 137.26 million.