Consolidation of The Finance Company PLC might be a desirable strategy, according to the Chairman of Lankaputhra Development Bank A. Sarath De Silva.
Lankaputhra Development Bank is the managing agent of The Finance, brought in to ‘put the house in order’, he said speaking to The Sunday Times FT this week. Mr. De Silva added that Lankaputhra will be responsible for giving the company professional input and arresting any adverse trends. “The process will be monitored by us.”
Mr. De Silva said that at present, there are no plans for a merger although it appears that consolidation is demanded. He expressed concerns that Lankaputhra does not want to throw good money after bad money and pollute their balance sheets.
A corporate lawyer said the latest Supreme Court interim order given on Monday, imposing certain restrictions on the Golden Key Credit Card Company, its directors and the entire Ceylinco Consolidated Group, should not affect the stimulus package for the finance and leasing companies. “Everyone goes under the assumption that Ceylinco Consolidated has ownership over all these companies but they don’t,” the lawyer said. “They are merely a shareholder in these companies. Golden Key is not necessarily connected to the finance companies and the Ceylinco Consolidated Group may not have a direct impact on the finance companies.” He added that the structure is fairly complicated and must be examined.
The Finance Company PLC is an independent publicly listed company and in turn, the Ceylinco Group is merely a shareholder in the company, he said. Some entities under the Group may have shares in The Finance, preventing it from selling off those specific assets. He added that under the stimulus package, The Finance is only being managed by Lankaputhra who is acting as the ‘managing agent.’ Lankaputhra has been brought in to take a completely independent assessment on the viability of the company. He said he does not believe that The Finance is contemplating any mergers.
The lawyer also said that when the Golden Key issue first broke, Ceylinco Chairman Lalith Kotelawela made it appear as if he could sell any of the assets in the Group but in reality, he does not have the power to make those sales. In fact, Mr. Kotalawela said he could sell off Seylan Bank and pay off the Golden Key depositors when he only has 1.2% of Seylan Bank shares while the rest were held by Ceylinco Insurance. Mr. Kotalawela also cannot sell the Ceylinco Insurance shares. |
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