MBSL to revive some Ceylinco companies
MBSL has stepped in to revive some of the Ceylinco Group of
Companies, including the acquisition of Ceylinco Savings Bank.
Similarly, the ailing ABC insurance Company was also taken over and
revived thereby adding value to its financial base.
According to the statement submitted to the CSE, the process of
acquisition of 78 percent of the voting shares of Ceylinco Savings Bank
was initiated in April 2009 with an investment of Rs 100m at a price of
Rs one per share.
Thereafter, the acquired entity was renamed as MBSL Savings Bank to
infuse public confidence and gain credibility.
An additional Rs 150m has been infused to acquire 72 percent of the
non-voting shares, taking the total investment to Rs 250m.
With the unanimous decision of the Board on September 2, 2010, Rs
12.8m of the voting shares have been disposed of at a price of Rs 3 per
per share, thus generating a profit of Rs 25.6m to MBSL.
Similarly, the unanimous consensus of the Board has been reached for
the disposal of the balance 68 percent voting shares at a price of Rs
3.75 per share and the entire 100,000,000 non-voting shares at a price
of Rs 2.35 per share being the best possible price negotiated by the
committee appointed by the Board,
based on the valuation obtained from Price Waterhouse Coopers for the
purpose of the merger and the sale prices were far in excess of the
valuation. This transaction will also result in a profit of Rs 325m to
MBSL.MBSL Savings Bank continued to run at a loss despite efforts made
by MBSL to revive the Bank.
Hence, if MBSL did not decide to dispose of the acquisition at this
stage, it would have been required to immediately invest a further Rs
1.3b to meet the capital adequacy requirements of MBSL Savings Bank
according to Central Bank requirements of Sri Lanka.
The Board of directors has stated that the Bank has followed all
relevant procedures in taking this decision, at the Board level and
communicated this decision to the parent company, the Bank of Ceylon and
the regulator, the Central Bank of Sri Lanka and obtained formal
approval from the Bank Supervision Department and the Non- Bank
Supervision Division of the Central Bank of Sri Lanka, which is the
direct regulator of MBSL.
Details of this transaction were reported to the Colombo Stock
Exchange (CSE) in October 2011.
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