Lovell, Galleon may doubt Maxis

By Duruthu Edirimuni Chandrasekera

Questions are being raised as to why the two sellers of Sri Lanka Telecom (SLT) stock last week to Global Telecommunications Holdings N.V. (GTH) a subsidiary of Usha Tegas sdn Bhd (UT), a Malaysian investment firm had sold out below the mandatory price and whether they did not have any faith in the new management to bring SLT to greater heights.

Alex Lovell, a Sri Lankan investor based in Dubai and Galleon Technology, managed by Sri Lankan born - US based Raj Rajaratnam sold their stocks on Wednesday and Thursday last week. "If these two parties believed that SLT under the new management will see its profitability increased to a higher level and the SLT share re-rated better, they may not have sold their stock below the mandatory offer price," an industry analyst pointed out.

GTH bought 32,785,000 shares of SLT out of which 7,100 were bought at Rs.48.75 per share and the balance at Rs.49 from Lovell. The Galleon stock was also bought by GTH at Rs.49. The Takeovers and Mergers code (T&M) was triggered by GTH, affiliated to Maxis Communications Bhd when it bought 35.19 percent, which is over 635 million shares of SLT from the Japanese based NIT Corporation for Rs.32 billion. The T&M was triggered at Rs.50.50 per share.

The analyst said that GTH is the largest telco in Malaysia. "They are experienced. They know what works. Under Maxis, looking at their expertise, one might have thought that Lovell and Galleon would have wanted to give them a chance," he added. As at April 21, GTH is in control of 40.28 percent corresponding to 726,.9 million shares. During the rest of the week from April 21-25 only under one million shares of SLT were bought by GTH.