Troubled ETI Finance to pay further 10% to depositors
View(s):Troubled ETI Finance (ETIF) has so far received over Rs.11 billion and these funds have been used to repay 20 per cent of the deposits and accrued interest liabilities of ETIF while another 10 per cent repayment to the depositors is being processed, the Central Bank (CB) said on Thursday.
“The CB wishes to emphasise that ETIF would be paying to its depositors a total amount in excess of Rs. 10 billion, without any financial contribution from the Government of Sri Lanka, Central Bank of Sri Lanka or the Sri Lanka Deposit Insurance and Liquidity Support Scheme,” the CB said in a statement issuing an update on the sale of subsidiaries sub-subsidiaries and investment properties of ETIF.
In a detailed statement, the CB said it has taken a number of measures on ETIF to address various irregularities taken place since 2011, including severe liquidity constraints faced by the company during the latter part of 2017.
Considering the extremely vulnerable liquidity position of ETIF and its inability to repay the depositors, the CB’s Monetary Board (MB) issued directions on January 2, 2018, restricting the operations of the company.
Further, based on a proposal submitted by the company, MB gave its concurrence on January 21, 2018 to dispose identified subsidiary, sub-subsidiary companies and investment properties of ETIF for a total consideration of US$75 million, with the view of repaying the depositors utilising the sale proceeds.
“The said transaction had to be concluded excluding certain assets for a total consideration of $70 million, which was received in four tranches and assets to the corresponding value were transferred to the buyers. Since the buyer did not remit the remaining $5 million, ETIF has retained its subsidiary, Swarnamahal Financial Services PLC (SFSP), which was intended to be transferred for the corresponding value. ETIF and SFSP, along with CB, are currently considering alternative measures to revive SFSP. Since SFSP was retained by ETIF for the $5 million not received, there has been no financial loss to ETIF despite the transaction not being completed in its entirety,” the statement said.
A number of regulatory measures has been taken on the company from time to time which resulted in, inter alia, the directors of ETIF transferring their personal assets including EAP Broadcasting Co Ltd and Swarnamahal Jewellers Ltd, and the directors giving an undertaking to transfer additional personal assets to cover the negative net worth of the company, it said.
“The CB would like to emphasise that as a result of the regulatory actions taken since the time of identifying the issues of ETIF, the company was able to realise this amount of cash to repay the depositors by disposing the assets transferred to ETIF. Further, CB has also initiated several legal actions against the directors of ETIF to seize personal assets of the directors and transfer those proceeds to ETIF,” the statement said.
Meanwhile, the CB said proposals submitted by an investor to the companies to revive them are being extensively considered and further developments in this regard will be communicated if these proposals are implemented.