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| Sunday, 23 May 2004 |
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Sampath to expand its capital base by Elmo Leonard On Thursday this week, Sampath Bank (Sampath) will launch a five year debenture issue of Rs 1 billion, giving the investor three options for receiving interest. The issue covers Rs 1 billion, and if oversubscribed, Sampath would reserve the right to increase it to a further Rs 500 million. The issue would close when oversubscribed, or on June 16, the bank's DGM, W Bandaranayake said. A total of 10,000,000 unsecured, subordinated redeemable debentures of Rs 100 denominations will be on offer with an option to issue a further Rs 5,000,000 if oversubscribed. The minimum subscription is 100 debentures making up Rs 10,000 and excess would be in multiples of Rs 5,000, manager investments, Janaka Jayadody said. The investor would have the options of choosing the payment of 10 percent, payable annually, or fixed interest rate of 9.75 percent, if requested for, bi-annually (annual effective rate of 9.99 percent per annum). Or, a floating interest rate of 2 percent per annum above the running 3 month Treasury Bill rate (net of withholding tax) payable quarterly. The date of redemption would be five years from the date of allotment. Deutsche Bank, Colombo will act as the trustee for the sale. This debenture, which has been rated as A by Fitch Rating (Lanka) Ltd, will be listed on the main board of the Colombo Stock Exchange, Sampath's AGM treasury, Ruwan Cooray said. Debentures would be easily tradable in the secondary stock market. The purpose of the issue is to expand the capital base of the bank in order to fund the bank's expansion and to mobilise medium term funds to match the medium to long term lending of the bank. Answering questions, managing director Anil Amarasuriya said that the funds coming in would also be used to pay out debenture holders, whose debentures would mature shortly. The bank's DGM marketing and finance, DGM Dharmawardane said the investors investors would stand to benefit from this issue due to the choice of regular income annually, bi-annually or quarterly. No capital loss would be incurred if held to maturity and investors who wish to liquidate their investments prior to maturity can do so through the Colombo Stock Exchange with the possibility of even capital gains. The debentures can also be used as security to obtain credit facilities from financial institutions other than Sampath Bank. |
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