Serious loss of capital amounting to Rs.1.5 billion for the six months ended 30 September 2009 at troubled The Finance Company (TFC) PLC has led the Directors to convene an Extraordinary General Meeting scheduled for 11 December 2009 in respect of the loss.
According to a letter by TFC Company Secretary P.S. Watson to the Colombo Stock Exchange (CSE) this week, the loss of capital has resulted in the net assets of the company eroding to a net liability of Rs.50.2 million as at 30 September 2009.
In order to prevent/recoup the loss already incurred, the Directors have proposed to reduce the rate of interest on fixed deposits on the entire base as at 31 May 2009 to 10% to 12.5% per annum with effect from 15 November 2009. Rates of interest on normal and minor savings deposits will be reduced to 8% per annum. The Easy Cash Deposit Refund facility will be used which will gradually reduce the deposit liability in three years.
Furthermore, the Directors have also proposed to recover the Group exposure and wherever possible, to obtain assets to the value of the loan granted and thereby reduce the bad debt provision. TFC is also planning on negotiating with banks to reduce the interest on loans and thereby reduce the financial costs. The company will dispose its land stock, taking advantage of the bank lending rates and the upward trend in the property market.
The five major shareholders in the company are Ceylinco Investment Co Ltd with a 37.13% stake, approximately 6.6 million shares. The other major shareholders are Pershing LLC S/A Averbach Grauson & Co. (8.34%), Ceylinco Insurance PLC (3.22%), Mr. J.L.B. Kotelawala (3.21%) and Mr. Y.S.H.I.K. Silva (0.90%).
Formerly part of the crisis-hit Ceylinco Consolidated, TFC is now part of the Merchant Bank of Sri Lanka.
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