Financial Times

Misty Mountain pursues Hayleys estates

By Duruthu Edirimuni
Despite being unable to seal deals with HVA Lanka and Namunukula Plantations Limited (NPL), Misty Mountain Holdings (MMH) is actively pursuing a sub-leasing agreement of three estates of Talawakele plantations owned by the Hayleys Group.

The Memorandum of Understanding between the two firms, which stipulates approximately Rs. 42 million as a down payment and an annual lease rental, is awaiting approval from the Treasury and Ministry of Plantation Industries.

Richard Ebell, Director, Hayleys Ltd., told The Sunday Times FT that Hayleys is working towards finalising this arrangement. "We are still talking to the Ministry of Plantations and are anticipating their approval," he said.

MMH burst into the limelight with sudden announcements of an 'acquisition spree' of Sri Lankan tea firms. It needs to obtain the government's approval as the 'golden shareholder' in plantation firms for leasing or buying estates.

MMH had earlier entered into a Sale and Purchase Agreement with John Keells Holdings Limited (JKH) and conducted a due diligence of NPL and its holding company Keells Plantation Management Services (Pvt) Ltd (KPMS) with the intention of purchasing KPMS.

But it abandoned the idea and last week announced that 'after reviewing the results of the MMH's due diligence at KPMS, MMH decided that the mix of non-tea assets and resulting debt ratios were not compatible with the specific needs of Misty Mountains'.

MMH had agreed to a purchase consideration of Rs. 400 million for 100 percent of KPMS subject to the due diligence of 65 days. KPMS has a 58.75 percent stake in NPL.

However a JKH statement said the deal with MMH was terminated as MMH was unable to satisfy the conditions in the sale agreement.

A top JKH official said the conglomerate is in no hurry to sell Namunukula, which has six estates, but will dispose of it at the right price and said that two other firms are interested in NPL. The Sunday Times FT learns that 'Wilmar's', an Indonesian tea company is looking at Namunukula while Damro, which was also attracted, had dropped out as they were only interested in rubber estates.

NPL has tea, rubber, coconut, oil palm, cinnamon and timber/ fuel wood estates amounting to over 7750 hectares. It is the largest producer of low-country tea, accounting for 2.79 percent of the country's total production.

Meanwhile, HVA, Managing Director, Rohan Fernando said they are contemplating litigation due to the losses the company has suffered as a result of the MMH negotiations. "HVA had entered into a contract with MMH on the basis that the latter would buy 60 percent of HVA's land, building, machinery and the brand," Fernando said.

MMH chairman Allen Lipscomb declined comment.

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