Consensus was reached this week between the Attorney General’s Department and counsel for the Golden Key management and depositors on the payment plan for refunding deposits under the proposed Trust.
“There was general agreement over all issues but a final decision will be taken next Wednesday,” a source at the AG’s Department said. The Trust will coordinate the recovery and repayments to depositors of the failed Golden Key Credit Card Co. Under the plan tentatively agreed by all parties, it is proposed to transfer all the assets to the trustees to be sold to raise funds to pay the depositors. The Trust is outside the control of the Ceylinco Group.
At the meeting on March 19, the Golden Key management submitted details of Rs. 14 billion worth of assets that could be disposed for the Trust while its counsel also expressed willingness to pay interest for depositors at the current Central Bank interest rates for the (security) deposits. The general consensus of the meeting was that there should be no reduction in the interest or the rebate paid to depositors when refunding their deposits.
Counsel for depositors and Golden key management have agreed in principle to proposals of the repayment plan but no final decision was taken on this matter at the meeting held at the AG’s Department, the source said. Discussions were centered on the payment plan and the modalities.
Another meeting will be convened next Wednesday – a day before the court case on March 26 - to reach a final decision on the whole issue. Golden Key, part of the Ceylinco Group, collapsed late last year after depositors found the company was delaying interest payments and not returning deposits totalling up to Rs. 26 billion.
Meanwhile according to the judgment of the Mount Lavinia Chief Magistrate Harsha Setunga, issued on the last day of the case (March 11), directors of the company are prevented from the sale and transfer of the assets of Golden Key Credit Card Company and its subsidiaries and their personnel assets in these companies. The ruling however doesn’t bar these directors from disposing their assets outside the Golden Key Group or any Ceylinco company outside the court ruling.
The following are the GK subsidiaries mentioned in the court order: Ceylinco Internet Services Ltd, Ceylinco Hospital Services, Golden Key Real Estate Agencies, Golden Key Credit Card, Asia 400 (Private), Ceylinco Midigama Fruit Farms, Golden Key Company, Electronic Pvt, Lanka Ceycom Technologies, C.K. Card Technologies, Ceylinco Networking Technologies, Ceycom Global Communications, Golden Key Communications Pvt, Golden Key Trading Company, Ceylinco Hospitals, Golden Key Solutions, Ceylinco Micro Technologies, Ceylek, Golden Key Travels Pvt, C.N.C International, Key Research & Information, Golden Key International Trading Company, Golden Key Institute of Computer Technologies, Golden Key Institute of Information Technology, Key Patents, Golden Key Eye Hospital, Ceylinco Midigama Trading Company, Golden Key Agrochem Company, London Technologies, Ceylinco Siranjan Investments Pvt, Ceylon Services & Supplies Company, Golden Key Consumer Durables, Golden Key Motor Company, Golden Key Designer Homes, Golden Key Computer Products, Ceylinco Consumers Electronics, Impression Creative Solutions, Golden Key Minerals, Golden Key Holdings, Golden Key Tea Products Sales, Golden Key Tea Factory, Golden Key Call Centre and Golden Key NTC Company.
Meanwhile a DFCC Bank board decision to auction Golden Key properties may however have to be put on hold.
The Bank earlier this week placed a public notice saying some land and property belonging to the Golden Key hospital would be sold by public auction to recover monies due to the Bank. In a newspaper advertisement, the Bank said the hospital owes DFCC Rs 103 million as loan repayments and another Rs 97 million as interest recovery.
In another DFCC board resolution, the Bank said it was putting up for public auction some land and property owned by Ceylinco Bio-Tech Ltd as the company owes the Bank a total of over Rs 17 million including interest.
On Friday, Fitch Ratings downgraded The Finance Company PLC (TFC) saying it reflects the liquidity stresses faced by TFC due to adverse public perception on the Ceylinco Group.
It said these perceptions are tied to the liquidity problems faced by, and subsequent collapse of, the Golden Key Credit Card Company.
Fitch downgraded TFCs National Long-term rating to 'BB+(lka)' from 'BBB(lka)', and its subordinated debentures to 'BB-(lka)' (BB minus(lka)) from 'BBB-(lka)' (BBB minus(lka)). The ratings have been placed on Rating Watch Negative and could be downgraded further or affirmed. TFC has an asset based of Rs.42 billion as at December 2008 and a network of 46 branches.
Fitch said TFC's profitability has also worsened as lending was constrained due to liquidity considerations, while asset quality remained challenged due to current macroeconomic conditions. Prior to this rating action, Fitch on 4 December 2008 revised TFC's Outlook to Negative from Stable to reflect the company's deteriorating profitability due to increased funding costs and the lack of a commensurate increase in real-estate related income.
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