Financial Times

RCL takeover to cost Rs. 820m
Dhammika Perera, the 'high-net-worth' investor who has been making waves in the Colombo bourse in recent months, has made a mandatory offer to minority shareholders of Royal Ceramics Ltd.(RCL) to buy their shares at Rs. 22 per share under the terms of the Takeovers and Mergers Code. It will cost him a cool Rs 820 million.

Perera has been the single largest shareholder of RCL during the past one year and is also the deputy chairman of the ceramic tile manufacturer. Known as one of the biggest local players in the market, Dhammika Perera, through his Vallibel Holdings, has used the stock market to gain controlling stakes in four separate companies in the past year.

He made good profits in short-term transactions during the bull run, buying low and selling when prices peak. He also owns a string of casinos. Perera has told shareholders in his mandatory offer that he sees tremendous potential for RCL with the changes taking place in the present global economic scenario, which is conductive to the construction industry.

The offer is being made consequent to Perera increasing his stake to almost 33 percent with the acquisition of 1.7 million shares of the firm, amounting to just over three percent of the issued capital, on September 5 at a price ranging from Rs 21-22.

The offer price of Rs 22, the highest Perera paid for the shares in the preceding 12 months, is below the initial public offer of Royal Ceramics, which was Rs 30 per share. Royal Ceramics is in the process of modernising its manufacturing plants in Eheliyagoda and Horana with an investment of Rs. 100 million to produce new designs and sizes. The Group's pre-tax profit was Rs. 132 million in the financial year ended March 31, 2003, a growth of 72 percent from the year before, while gross turnover exceeded a billion rupees.

Perera said he will continue RCL's business activities as in the past and that he has no intention of introducing any major changes to the business, including the re-deployment of fixed assets.

RCL has a team of dedicated and loyal employees and Perera has assured them of their continuous employment in the company. Perera has also promised that the emoluments of the Board of Directors of RCL will not be affected by his acquisition of RCL shares. Under the mandatory offer Perera has to buy up 37,247172 ordinary shares. Pan Asia Bank, in which Perera has a 10 percent stake and is a director, has described Perera as "one of our most valued customers" in a letter to the Security and Exchange Commission.

The letter, sent to shareholders with the mandatory offer at Perera's request, said Perera is in a position to fund the full acceptances of the offer. Perera owns 83 percent of LB Finance Limited, 52 percent of inbound tour operator and star-class hotel owner Connaissance de Ceylan Limited, and 51 percent of Hotel Reefcomber Limited. He is on the boards of LB Finance and Connaissance.

Shareholders have been advised that the board of RCL is obliged to communicate to every shareholder its views, comments and advice given to it by the independent advisor under Rule 12 of the Take Overs and Mergers Code of 1995.
RCL takeover to cost Rs. 820m

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