Sampath Bank together with a consortium of investors, and businessman Ishara Nanayakkara-led LOLC, have expressed interest in Ceylinco Chairman Lalith Kotelawala's 23% controlling stake in Seylan Bank, Seylan sources said.
"He has nearly 23% at Seylan, but all of about 48% is controlled by him. But he cannot sell the balance of 25%, because this holding is in the employees’ share trust," a Seylan source told The Sunday Times FT.
A senior Sampath official confirmed that the bank has sent an Expression of Interest (EOI) to Seylan Bank.
He said Mr. Kotelawala is offering his 23% at Rs. 10 billion, but this price is way too high. "This is what is deterring Sampath from making a firm commitment," he added.
Mr. Nanayakkara, through his LOLC group has also expressed interest to purchase these shares, but for him too the price seems too high, the Seylan source further said. Late last year, Mr. Kotelawala announced that he planned to sell his shares at Seylan to settle depositors at the crisis hit Golden Key Credit Card Co, which faced a run last December. The exposure at this credit card company is believed to be Rs. 26 billion.
Soon after the Golden Key crisis and fearing a run on Seylan Bank, which is part of the Ceylinco Group, the Central Bank took over management and handed itto the Bank of Ceylon. A new board of directors headed by Eastman Narangoda is now installed at Seylan and has assured depositors, stakeholders and the public that the bank is ‘sound and safe’.
The Seylan source said a Dubai investor who was interested when Mr. Kotelawala announced his desire to dispose these shares has now backed out. Senior Seylan officials were unavailable for further confirmation on the status of Mr Kotelawala’s shares.
Seylan Bank is a calendar year (accounting) company and its annual accounts and annual general meeting was last held on June 30, 2008. The 2007 accounts was sent to shareholders in June, according to the Bank’s annual 2007 report.
Seylan’s 10 largest shareholders are Dr. T. Senthilverl (5%), Dollar Distribution (Pvt) Ltd (5 %), Seyfast (Pvt) Ltd (5%), Seyshop (Pvt) Ltd (5%), Seybest (Pvt) Ltd (5%), Sesot (Pvt) Ltd (5%), Esots (Pvt) Ltd (4.96 %), Ceylinco Financial PLC (4.91), Ceylinco Insurance PLC (4.03%) and Ceylinco Ltd (3.86%).
Though Mr Kotelawala figures down the list with just a 1.22% stake, his combined control extends to over 20%.
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