NTB summons EGM for shareholder approval for unusual rights issue

Strategy to protect JKH and Central Finance interest while protecting minority

The Nations Trust Bank PLC (NTB) has summoned an Extraordinary General Meeting on Jan. 12 to seek shareholder approval for an unusual rights issue under which approx. 40.1 million new convertible non-voting shares are being issued in the proportion of four new non-voting shares for every 23 voting shares held at a price of Rs. 80 per share.

"This is the first time any company is issuing non-voting shares against already held voting shares," an analyst said. "The exercise is intended to enable JKH and Central Finance (CF) to subscribe to the issue despite the constraints imposed on these two dominant shareholders of NTB under terms of the Banking Act."

Both JKH and Central Finance are hamstrung by the problem of holding the maximum permitted stake of the bank in terms of the voting shares they already hold. But this restriction does not apply to non-voting shares.

Minority shareholders’ interests have been protected by making the new non-voting shares convertible to voting shares down the road without cost.

In a circular to shareholders, NTB has explained the arrangement and said that JKH and CF owning approx. 64.9% of the bank have committed to subscribe for their rights. An under-subscription by the minority shareholders has been described as an "unlikely event" although the NTB share has been recently trading at around the Rs. 80 level at which the rights shares have been priced.

The NTB share which closed on Friday at Rs. 78 for a small quantity of 588 shares had traded between a low of Rs. 78 and a high of Rs. 87 between Sept. to Nov. this year closing at Rs. 80, Rs. 83 and Rs. 80 in these three months. As at Dec. 12, the last trading day before the circular was printed, the closing price was Rs. 80.

Analysts noted that recent rights issues by other commercial banks, like the Commercial Bank of Ceylon, HNB and Sampath priced their rights at a substantial discount to the prevailing market price and shareholders had an instant capital gain on their new shares.

"This is not the case with NTB," an analyst said. "Big shareholders of Sampath had to forego a proportion of their rights (of voting shares) due to limits specified by the Banking Act. As a result, small shareholders applying for additional shares over and above their entitlements got as many as 9,000 shares enabling a tidy profit."

NTB plans to infuse approx. Rs. 3.2 billion with the rights issue and a further Rs. 3.5 billion by the issue of listed, rated, unsecured, subordinated, redeemable five-year debentures with a "non-viability conversion" to ordinary voting shares "solely if instructed by the Central Bank of Sri Lanka."

A second meeting immediately following that seeking approval for the rights issue will also seek shareholder approval for the debenture issue. Both these capital raising exercises have been undertaken to strengthen Tier 2 capital of the bank to comply with BASEL III requirements.

NTB has a solid dividend paying track record having paid dividends of Rs. 2.10 per share during the last three financial years. The bank has made a profit of Rs. 2.745 billion in the first six months of the current financial year and the net asset value of the NTB share was Rs. 80.94 (group Rs. 85.42) as at Sept. 30, 2017.

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Sri Lankan stocks end flat near 8-mth low; turnover hits 1- year low

Reuters: Sri Lankan shares ended flat on Friday for a second straight session, while trading was muted with turnover hitting its lowest level in a year ahead of Christmas holidays.

The Colombo Stock Index ended 0.22 points firmer at 6,323.74, edging up from its lowest close since April 11 recorded on Wednesday.

The bourse fell 0.5 percent during the week, its seventh straight weekly fall.

“Very low turnover .... the turnover hit a 12-month low as most of the investors are on vacation, especially the high net worth investors,” said Dimantha Mathew, head of research at First Capital Holdings,

Shares in Ceylinco Insurance Plc gained 7.1 percent up while those in Ceylon Tobacco Company Plc ended 0.5 percent up.

Hemas Holdings Plc fell 2.2 percent while the biggest listed lender Commercial Bank of Ceylon Plc ended 0.6 percent weaker.

Turnover stood at 115.1 million rupees ($752,779.59), the lowest since Dec. 27, 2016 and was well below this year’s daily average of 926.5 million rupees.

Foreign investors net bought 10.3 million rupees worth of shares on Friday, extending their year-to-date equity purchases to 18.4 billion rupees.

Both the currency and stock markets will remain closed on Monday for a holiday and normal trading will resume on Tuesday. 

($1 = 152.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)

Sri Lankan stocks end steady near 8-month low in lean trade

Reuters: Sri Lankan shares ended steady on Thursday, near an eight-month low hit in the previous session, as losses in oil palm and telecommunications offset gains in banking and diversified stocks.

The Colombo Stock Index ended 0.03 percent firmer at 6,323.52, edging up from its lowest close since April 11 touched on Wednesday. Trading was muted ahead of the holiday season, with turnover hitting a 10-month low.

“The dull sentiment is continuing with the year-end holidays coming in,” said Atchuthan Srirangan, senior research analyst at First Capital Holdings PLC.

“Most of the investors and brokers are already on holiday and trading is taking place on very low volumes. We expect low turnover to continue for the next few days.”

Shares in Ceylinco Insurance Plc ended 2.9 percent up while those in Melstacorp Plc rose 1.9 percent.

Sri Lanka Telecom Plc fell 1.4 percent while Hatton NationAl Bank Plc ended 0.7 percent weaker.

Turnover stood at 134.7 million rupees ($880,967.95), the lowest since Feb. 1 and well below this year’s daily average of 933.3 million rupees.

Foreign investors net sold 79.6 million rupees worth of shares on Wednesday. They have net bought 18.3 billion rupees worth of equities so far this year. 

($1 = 152.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)

SLT invests Rs 2.4 bn for data centre

Sri Lanka Telecom’s data centre infrastructure has been undergoing a major transformation with state-of-the-art Tier 3 Data Centre constructed in Pitipana inter-connecting multiple data centres located in SLT headquarters and welikada.

Investment for phase 1 of the data centre project is Rs 2.4 billion.

With this new development, SLT is able to offer broader portfolio of robust co-location and Data hosting facilities at very competitive price packages.

Even in the midst of the industry’s shift, SLT continued to strengthen the data centres as integral components of its overall IT infrastructure strategy and data centres are already accommodating user expectations with advanced IT systems and service level uptime or availability coupled with new service offering opportunities for their valued Enterprise & SME customers.

The Company expect to facilitate more CEOs, CIOs, CTOs and IT experts who are looking to fulfill the IT anytime, anywhere model by delivering the necessary performance, uptime and level of fault tolerance with redundancy. The new data Centre of SLT located in newly proposed Tech city area will have a capacity of - 500 racks with a provision to increase the capacity. Customers will be able to hire racks as and when they are required to manage their CAPEX and OPEX effectively. The rental payment expected from the customers will be far less in comparison to the amount they will be required to spend in order to have their own data centres. SLT intends to provide expert knowledge and bear all costs associated with space, protection, disaster management etc.
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Raigam cuts SL’s wheat imports with launch of rice flour noodles

The country can save Rs 925 million annually by reducing the import of wheat flour due to the introduction of rice flour noodles to the country.

This opinion was expressed by Dr Ravi Liyanage, Chairman, Raigam Group of Companies, at the launch of the Raigam Devini Batha Bundi Full instant rice noodles to the Sri Lankan market on Tuesday, in Colombo.He said to construct the manufacturing plant to make noodles out of 100% rice grown in Sri Lanka, the group had invested over Rs 300 million. Situated in Homagama, this facility has a capacity of 5,000 MT per annum.

The Kingdom of Raigam earlier had fired the first salvo to save the country from importing salt from overseas by taking the initiative to re-awaken the salt industry in Sri Lanka.

With Raigam taking steps to start saltern construction and table salt refineries in the country the country managed to reduce its salt import to less than 7,000 MT in 2011. Dr Liyanage said Sri Lanka will be able to export the excess salt in the near future.

It was also disclosed that the Wayamba Salterns PLC has recorded a revenue of Rs. 723.4 million in 2017.

Commenting on the unprecedented financial growth achieved during this financial year, Raigam Wayamba Salterns, Chairman, Liyanage said in comparision to the revenue of Rs. 414.6 million recorded in 2016, this was the highest ever financial performances recorded by the Group.

Dr. Liyanage also mention about the severe slat shortage in the country in 2016 and said although many salt businesses came to a standstill, Raigam managed to service the market due to prudent stock management practices of the company.

Earlier this year the company issued 80 million shares at an affordable price of Rs 2.50 per share for anyone like school teachers or university students to become shareholders of the company by investing Rs. 2,500 the minimum subscription.

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Fitch rates BOC’s Basel III Sub-Debt ‘AA(lka)’

Fitch Ratings has assigned Bank of Ceylon’s (BOC, AA+(lka)/Stable) proposed Sri Lankan rupee-denominated Basel III-compliant subordinated unsecured debentures a final National Long-Term Rating of ‘AA(lka)’.

The debentures, totalling up to Rs 8 billion are to have maturities of five and eight years and carry fixed- and floating-rate coupons. The bank plans to use the proceeds to support its loan book expansion and to strengthen its Tier II capital base. The debentures are to be listed on the Colombo Stock Exchange.

The debentures are to qualify as Basel III compliant regulatory Tier II capital for the bank and include a non-viability trigger upon the occurrence of a trigger event, as determined by the Monetary Board of Sri Lanka.

The final terms indicate that the notes are subject to temporary or permanent write-down as determined by the Monetary Board of Sri Lanka and can be partially or fully written down upon the occurrence of a trigger event. There are no equity conversion provisions in the terms. The final rating follows the receipt of documents conforming to information already received and is in line with the expected rating assigned on October 26, 2017.
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Nations Trust Bank in rights issue

Nations Trust Bank (NTB) is to undertake a rights issue of 40,105,614 ordinary non-voting convertible shares in the proportion of four shares for every 23 held as on January 12, 2018, subject to approval by the CSE and shareholders, the bank said in a stock exchange filing. The rational to issue non-voting shares with a conversion option, as opposed to another class/type of security is, in its efforts to raise capital to meet regulatory requirements, to augment the anticipated balance sheet growth, NTB said.

Non-voting shares would give the bank the ability to source full subscription from all shareholders for the rights issue despite the restrictions placed by the Central Bank on shareholders carrying voting rights, the bank said.
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