Any disposal of assets including real estate by the Ceylinco Conslidated Group will need the prior approval of the Mount Lavinia Chief Magistrate’s Court following a ruling on Wednesday that the Golden Key Credit Card Company, its subsidiaries and directors be prevented from selling or transferring any assets.
Deputy Solicitor General Sarath Jayamanne told The Sunday Times FT that this Court ruling should however not affect the stimulus package for finance and leasing companies drafted by the Central Bank (CB) which makes provisions for Lankaputhra Development Bank to acquire any property the companies want to dispose of at 67% of the market value. Mr. Jayamanne said the order of the court was that property cannot be divested without the court approval. He added that if companies are looking to dispose of their assets for the purposes of paying depositors, the court will most likely grant approval.
Real estate industry sources said most properties in the Ceylinco Group, including Ceylinco House, that don’t come under the ambit of the stimulus package would be affected by the ruling. “Any property where Ceylinco Chairman Lalith Kotelawala has assets or a stake will need court permission to sell,” one source said. Kotelawala, currently in remand in connection with the Golden Key (GK) fraud, has said he wants to dispose of several assets to pay off GK depositors.
Last weekend Ceylinco House, once the flagship and headquarters of the group, was put up for sale. Located on Janadhipathi Mawatha, the advertisement described the building as an ‘icon of commercial history’ and lists all its modern facilities including a spacious entrance and lobby area, 20 passenger lifts and a fireman’s lift, a comprehensive 24 hour security and surveillance system, three 500KVA stand by generators, a building maintenance unit and an effective lightning protection system.
Another Ceylinco property put up for sale was Hotel Ceysands located 60 kilometres south of Colombo in Bentota. According to the advertisement, Ceysands has 84 air-conditioned rooms, two swimming pools, a coffee shop, pizza outlet, shopping arcade, tennis, badminton and volleyball courts and offers ayurvedha and health care treatments. The hotel sits between the sea and the Bentota River and boasts ‘a rich eco-environment abundant with migratory bird life.’
meantime, the stimulus package for finance and leasing companies will most likely only be taken up by the troubled companies which fall under the Ceylinco Consolidated Group. Chairman of the Finance Houses Association of Sri Lanka Shirley Perera aid most finance and leasing companies, particularly large institutions like Central Finance and LOLC, are unlikely to avail themselves of the stimulus package.. Mr. Perera said most companies are not heavily involved in real estate as the Ceylinco companies are and would rather sell their property on the market and get full price as opposed to the 67% being offered in the package. He also pointed out that companies who may want to avail themselves to certain parts of the plan would still be subject to all the conditions including remuneration cuts for the board of directors.
Mr. Perera added that Lankaputhra Bank, the institution chosen by the CB to purchase the land from companies, and the Finance Ministry are in the process of preparing a circular with instructions to the finance and leasing companies. He expects to receive the circular early next week.
Director of Bartleet Finance Ltd Buwaneka Subasinghe said his company will not be going in for the stimulus package. “We have sufficient funds and we have an inflow of deposits,” he said. Mr. Subasinghe added that percentage wise, withdrawals are a little more than new deposits. However, long standing customers have remained and the company is in the process of trying to restore confidence in the public. According to Bartleet’s website, the company’s fixed deposit base exceeds Rs.2.4 billion and its lending portfolio exceeds Rs.3.2 billion.
Meanwhile independent consultants Wealth Lanka Management (Pvt) Ltd is expected to come up with a repayment plan for two companies under Ceylinco Shriram Capital Management Services Co. (Pvt) Ltd by the second week of April. Wealth Lanka was recruited to evaluate the assets and liabilities Ceylinco Capital Investment Company (Pvt.) Ltd and CLC Asset Management (Pvt.) Ltd, both managed by Ceylinco Shriram. These two companies are not registered with the CB.
The companies ran into trouble after several depositors withdrew or attempted to withdraw their money from the two companies following the Golden Key collapse. Former financial ombudsman Walter Laduwahetty has been appointed as the administrator to look after the interests of the creditors until the repayment plan is in effect, a requirement of the Companies Act No. 7 of 2007. Mr. Laduwahetty’s appointment is expected to be ratified later this month.