Sri Lankan bourse slips from over 2-wk high; low turnover

(Reuters) - Sri Lankan shares slipped on Monday from a more than two-week high as turnover was thin as most investors stayed away ahead of voting on a resolution at the United Nations over its human rights record later this month.

The main stock index ended 0.14 percent, or 8.45 points lower at 5,957.61. It had climbed to a two-week high closing in the previous session.

Shares of top conglomerate John Keells Holdings PLC fell 1.36 percent to 227.00 rupees.

The day's turnover was 304.3 million rupees ($2.3 million), well below this year's daily average of about 984.4 million rupees.

The market witnessed a daily average turnover of 360.9 million rupees in the last six sessions, which analysts attributed to cautious investors opting to be on the sidelines ahead of a resolution on Sri Lanka coming up for voting at the United Nation's Human Rights Council later this month.

Reacting to a report by the U.N. human rights chief, Sri Lanka last week questioned the independence of the human rights office of the UN after the United States asked it to investigate violations by the Sri Lankan government.

Foreign investors bought a net 32.6 million rupees worth of shares on Monday, but they have been net sellers of 5.36 billion rupees for the last 21 sessions as some offshore funds exited the market.

The index has seen a net 4 billion rupees of foreign outflows so far in 2014, after net inflows of 22.88 billion rupees last year. 

($1 = 130.5750 Sri Lanka rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka stocks close weaker

Mar 10, 2014 (LBO) - Sri Lanka's stocks close 0.14 percent lower Monday with Sri Lanka Telecom and John Keells Holdings losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 8.45 points lower at 5,957.61 down 0.14 percent. The S&P SL20 closed 7.30 points higher at 3,252.29, up 0.22 percent.

Turnover was 304.30 million rupees, up from 233.28 million rupees last Friday with 64 stocks close positive against 93 negative.

Foreign investors bought 149.04 million rupees worth shares while selling 116.48 million rupees of shares.

Blue Diamonds closed 20 cents higher at 3.40 rupees and Touchwood Investments closed 10 cents lower at 2.60 rupees, attracting most number of trades during the day.

SLT closed 70 cents lower at 44.10 rupees and JKH closed 1.00 rupee lower at 227.00 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 1.00 rupee lower at 63.70 rupees and its W0023 warrants closed 10 cents lower at 67.90 rupees.

Commercial Leasing and Finance closed 10 cents lower at 3.90 rupees and Commercial Bank closed 50 cents higher at 115.50 rupees.

Dialog Axiata closed 10 cents higher at 9.10 rupees and Bukit Darah closed 5.00 rupees higher at 545.00 rupees.

Ceylon Tobacco Company closed 2.30 rupees lower at 1,120.00 rupees and Distilleries closed 50 cents lower at 203.50 rupees.

Sri Lanka sells US$187mn in 3-year floating rate bonds

Mar 10, 2014 (LBO) - Sri Lanka has sold 187 million dollars of 3-year bonds at a yield of 400 basis points above the London Interbank Offered Rate, the state debt office said.

On March 10, LIBOR was 0.3318 percent, the debt office said.

The debt office had offered 60 million US dollars of securities styled 'Sri Lanka Development Bonds' and had received bids for 3.1 times that amount.

The bonds are mostly bought by Colombo-based banks and investors who are allowed to hold foreign currency assets.

Banyan Tree to take Sri Lanka unit private

Mar 10, 2014 (LBO) - Banyan Tree Holdings Limited said it will take its Sri Lanka unit private which was in need of fresh capital and was hit by a newly introduced minimum public float restriction.

Banyan Tree controls 79.8 percent of Beruwala Walk Inn, a hotel that was hit by a tsunami in 2004.

The firm said it needed a fresh capital infusion to rebuild the hotel. But if some minority shareholders do not take up their entitlements of shares, the company will not be able to meet a requirement for a 20 percent minimum public float.

The firm said in a stock exchange filing that the majority shareholder would offer 120 rupees per share. The stock last traded at 104 rupees.

Beruwala Walk Inn is one of the early victims of the minimum public float rule.

The rule was brought by authorities after being egged on by interventionists shortly after stock manipulations during a stock market bubble fired by low interest rates and margin credit.

Related News:
http://www.cse.lk/cmt/upload_cse_announcements/9431394422893_.pdf

SEC tackles transgressing Touchwood!

* Issues Notice of Action on several Directors for alleged malpractices following thorough investigations
* Refers suspected criminal offences to CID
* Tough regulatory action deals fresh blow to TWOD on top of 19 March deadline from winding up applicants at Commercial High Court

The Securities and Exchange Commission (SEC) has stepped up its stranglehold on the transgressing Touchwood Investments PLC (TWOD) following the completion of investigations.

Last week, the SEC informed the Commercial High Court, which is hearing a winding up case of TWOD that Notices of Action have been issued on several Directors for alleged malpractices including market manipulation via non-disclosure. Furthermore SEC has also referred the case to the Criminal Investigation Department (CID) several suspected criminal offenses by TWOD and certain Directors.

The tough action by SEC follows conclusion of thorough investigations that lasted for over six months. Among alleged incidents of malpractices are overvaluing personal properties of Directors and selling them back to the company. Matters referred to the CID also include  breach of trust and misappropriation of funds.

Investigations focused on ascertaining if any offence under the provisions of the SEC Act No. 36 of 1987 (as amended) or any rules or regulations made there under or the Listing Rules of the CSE have been committed.

When contacted, SEC Officer in Charge and Deputy Director General Dhammika Perera declined to give and confirm details but admitted that Court on 6 March was notified of certain actions taken. TWOD as of Friday hadn’t made a disclosure to the market about the recent measures taken by the SEC.

The latest regulatory action by the SEC is on top of TWOD being made the first listed corporate to suffer a freeze of all non-current assets without the prior approval of the SEC till the completion of the investigations. This action in September last year was done in a bid to prevent stripping of further assets.

Nine investors of TWOD’s timber plantation schemes in late September filed a winding up application in the Commercial High Court and the company which is under a new Chairman has so far failed to live up to the promises made to the Court with regard to settlement.

The application was after investors of Touchwood were given many assurances by the company over the years. These assurances came in the form of affidavits sworn by the Directors of the company and dated cheques issued by the company which were dishonoured, proving the insolvent state of the company.

A settlement was entered into by the parties on 31 October 2013 where the company sought to be wound-up undertook to pay all the investors of the Agarwood Plantation in Thailand to whom the Harvest Agreement Certificates were issued by the company and who failed to adhere to the terms of settlement. The terms of settlement were thus amended on several occasions upon numerous assurances given by the company to settle all the creditors.

The company filed in Court, a list of investors who will be paid by the company. As stated on 25 February 2014 in Court, the company also assured the keeping of a property as security and file the relevant documents in Court on 6 March 2014 which they failed to do.

The cheques issued to the Petitioner and eight other intervening creditors, by Touchwood Investments PLC CEO Lanka Kiwlegedara from his personal bank account, were all retuned due to insufficiency of funds in his account. These cheques dated 27 February 2014 were presented in open Court to the Petitioner and the creditors by the CEO of Touchwood when the case was called on 27 January 2014.

The company requested the investors to present the cheques on 3 March 2014 despite the cheques being dated 27 February 2014. The cheques that were presented on 3 March 2014 were returned nonetheless, and no reasoning was given by the company. The day before the court date (5 March, 2014) the company filed a motion in Court stating that the cheques had been returned due to the insufficiency of funds in the bank account of the CEO as there has been a delay in the remittance of funds from the account of a foreign investor in a bank in China.

The company sought further time to honour the cheques issued and it was also stated that the CEO has requested a temporary overdraft facility from his local bank to honour the said cheques.

Commercial High Court Judge Amendra Senevirathna appreciated the fact that in any event an offence has been committed by the CEO of the company as cheques issued from his account have been returned. The next hearing of the application is on 19 March.
www.ft.lk