Following directive by President:

New company to transfer GKCGSPV assets

by Surekha GALAGODA

A new company will be set up to transfer the assets of GKCG Special Purpose Vehicle (Pvt) Ltd (GKCGSPV) and go public as soon as possible but not later than December 31, next year said Governor Central Bank Ajith Nivard Cabraal. He said that this was decided on following a directive by President Mahinda Rajapaksa after he met Golden Key Depositors at Temple Trees on October 18.

The new company will be formed under the Companies Act to transfer the assets of Golden Key Credit Card Company. The depositors of Golden Key will be appointed as shareholders of the new company. Accordingly, the assets of Golden Key will be transferred to the GKCG Special Purpose Vehicle (Pvt) Ltd. (GKCGSPV) and the depositors of Golden Key would be made shareholders of the new company in proportion to the percentage of their deposits in the Golden Key Credit Card Company.

According to the report submitted to President Rajapaksa, the board of directors and the management structure of GKCGSPV, three members of the committee of Chartered Accountants will serve on the board until the end of this year or beyond as agreed upon by both parties. Three depositors representing the security deposit holders of GKCG will be appointed by January 1. The chairman will be appointed by the directors while a CEO will be recruited and appointed by the board while a consultative committee consisting of 10 members will be nominated by the initial shareholders.

The report said that if necessary, the company will sell new shares or borrow money from the banks based on their assets and balance sheet and operate the business on a commercial basis.

The company could be launched with the identified net assets of Rs 2 bln for which value, shares could be issued to the Security Deposit Holders.

Initially, security deposit holders will get 15,930 shares of Re 1 each of GKCGSPV for each block of net security deposit of Rs 100,000.

When the scheme is implemented the security deposit holders would be free to sell their shares initially via private transfers and realise gains or hold the shares until the company goes public and trades the shares in the stock market.

The GKCC All Depositors’ Association and the Golden Key Depositors Society have agreed to the strategy presented by the Central Bank at the meeting held on October 18. According to the President of the Golden Key Depositors’ Association - if the company can acquire all the assets, sell them and give us our money it will be a better option.

We are happy and grateful that President Rajapaksa has stepped in to help the depositors. She said that at the Annual General Meeting held at the S.D.S. Jayasinghe Hall in Dehiwela we unanimously decided that we do not want shares of a company but the money as we are stranded without the cash. Forming a company to acquire the assets of Golden Key is good but giving us shares would not solve our problems and also we don’t wish to fall into the same pit again.

According to discussions we will only get 10 percent of the shares and if a depositor has deposited Rs 100,000 he would get 1,593 shares. This amounts to two billion rupees worth of shares at Rs 10 each. But Lalith Kotelawala has produced a list of assets worth Rs 13 billion to the Supreme Court. We have been suffering for two years but within one year we were paid Rs 100,000 each while the depositors of other failed finance companies did not get anything.

She said that it is one year since Lalith kotelawala was released on bail. Though he promised that he would settle the depositors as soon as he comes out of jail it is not so. Today he travels by car and lives in luxury and is not worried about the poor depositors. He together with the director board is very happy about the share option as they would get another chance to cheat us.

The case will be called again on October 27 and the Attorney General Mohan Peiris promised us that indictments will be served against Lalith Kotelawala and the Directors. This, he said, would bring the hidden assets to light.