Despite the confusion of the wrong company being listed in the troubled Revival of Underperforming Enterprises and Underutilized Assets Act, a consortium of five state entities headed by Sri Lanka Insurance Corporation (SLC) is going ahead with a plan to pay compensation for creditors, contractors and those who paid advances to buy super luxury residential apartments of the state-acquired Celestial Residencies, one of the premier iconic properties of collapsed Ceylinco group of companies, official sources said.
Compensation will come out of the SLC’s Rs. 6.8 billion investment, major stakeholder of the consortium formed to revive Celestial Residencies.
The consortium includes state run Bank of Ceylon, People's Bank and the Employees Provident Fund and Employees Trust Fund which are separately ploughing in Rs.9.2 billion in the project.
The Business Times last week highlighted an error made by authorities in indicating the wrong company as the owning company of Celestial Residencies.
The owning company of Celestial Residencies is Ceylinco Homes International Lotus Tower with its main shareholders being Ceylinco Homes International, Ceylinco Capital Investment (a subsidiary of troubled Shriram Capital Management), and Ceylinco Insurance, Ceylinco Homes International.
But the Act stipulated Ceylinco Leisure Properties Ltd as the owning company of Celestial Residencies.
This matter has now been sorted out in agreement with all stakeholders and compensation will be paid to Ceylinco Homes International, the owning company of Celestial Residencies, official sources said.
They noted that there is no need to amend the schedule as the matter was settled amicably by the two Ceylinco companies with the Competent Authority.
Meanwhile, Lanka Tractors unit, Globe Commercial Trading Ltd is planning international arbitration as the authorities have failed to respond to a letter of demand sent to Treasury Secretary Dr. P.B. Jayasundera in November 2011, in a dispute over the takeover of its property under this Act.
According to the letter, these properties were not owned by the government or a government agency “within a period of 20 years before prior to the date of the coming into operation of this Act since it belonged to a public company incorporated under the Companies Act on 20 September 1991.”
A senior member of the committee appointed to monitor the process of paying compensation and to revive the sick enterprises under the Act told the Business Times that no one from the company has made representations before the competent authority making their claims.
Two investors have already expressed willingness to develop the Lanka Tractors assets, he revealed.