FLC Holdings PLC Friday disclosed in a Stock Exchange filing that it was utilizing a sum of Rs. 225 million of the proceeds of an Initial Public Offering (IPO) of Rs. 600 million initially allocated for two mini hydropower projects to purchase 22.5 million shares in a wholly owned subsidiary, FLC Properties (Pvt) Ltd., at Rs. 10 a share.
The filing said that FLC Holdings MD/CEO had said in his review in the company’s annual report for 2013/14 that Dolekanda Power (Pvt) Ltd. could not obtain energy permits from the Sustainable Energy Authority for its two mini hydropower projects Rakwana 1 and Rakwana 2 which the IPO prospectus said had a total energy capacity of three MW.
This was due to a dispute with regard to the resource allocation. The proportionate allocation of funds for these two projects, out of the total of Rs. 600 million raised on the IPO was Rs. 225 million.
At present the unutilized IPO funds have been invested in short-term deposits at financial institutions by FLC holdings earning interest income ranging from 4.20% to 7% per annum subject to a 10% withholding tax, the filing said.
It further said that FLC Properties had been able to lease all floors of FLC Tower at No. 19, Dudley Senanayake Mawatha, Colombo-8 after additional car parking facilities had been provided to tenants at a separate 33.75 perch land purchased for Rs. 113.4 million at Sumner Place, Borella.
The capital infusion of Rs. 225 million to FLC Properties by the purchase of its shares by FLC Holdings would save the former company 11% interest it was incurring and also avoid corporate tax on the income of a temporary inter-company loan at 28% to FLC Holdings.
With this infusion of equity funds, the board of FLC Properties is confident of recording profits for the year 2015/16 and paying dividends to FLC Holdings, its only shareholder, the filing said.
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The filing said that FLC Holdings MD/CEO had said in his review in the company’s annual report for 2013/14 that Dolekanda Power (Pvt) Ltd. could not obtain energy permits from the Sustainable Energy Authority for its two mini hydropower projects Rakwana 1 and Rakwana 2 which the IPO prospectus said had a total energy capacity of three MW.
This was due to a dispute with regard to the resource allocation. The proportionate allocation of funds for these two projects, out of the total of Rs. 600 million raised on the IPO was Rs. 225 million.
At present the unutilized IPO funds have been invested in short-term deposits at financial institutions by FLC holdings earning interest income ranging from 4.20% to 7% per annum subject to a 10% withholding tax, the filing said.
It further said that FLC Properties had been able to lease all floors of FLC Tower at No. 19, Dudley Senanayake Mawatha, Colombo-8 after additional car parking facilities had been provided to tenants at a separate 33.75 perch land purchased for Rs. 113.4 million at Sumner Place, Borella.
The capital infusion of Rs. 225 million to FLC Properties by the purchase of its shares by FLC Holdings would save the former company 11% interest it was incurring and also avoid corporate tax on the income of a temporary inter-company loan at 28% to FLC Holdings.
With this infusion of equity funds, the board of FLC Properties is confident of recording profits for the year 2015/16 and paying dividends to FLC Holdings, its only shareholder, the filing said.
www.island.lk
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