Financial Times

Vanik sells two subsidiaries
Vanik Incorporation, the troubled financial services firm that has repeatedly defaulted on payments to its debenture holders, has reportedly sold off two subsidiaries.

Stock brokers SC Securities said Vanik has entered into a contract with Capital Reed Co. and sold off Vanik Leasing Limited and Vanik Factoring to that company.

"It has diluted the holding stake at these two companies and, as a result, is getting Rs 45 million inflows of cash." This resulted in the company's share price fluctuating last week. Vanik shares touched Rs 3.50 levels on Friday and settled back and closed the week at Rs 1.50.

Vanik CEO Justin Meegoda had earlier denied that he was planning to transfer company assets after debenture holders raised fears about such a move. However, he had confirmed that he was restructuring Vanik and planned to bring in new investors.

Meegoda was not available for comment last week. Debenture holders have warned that if new investors get a stake of the existing assets of Vanik subsidiaries, that could dilute the benefits that Vanik derives from these subsidiaries. That in turn could affect the debenture holders of Vanik.

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