Crisis-hit F&G and PDL get wakeup call after two years
Depositors of the crisis-hit Ceylinco Finance and Guarantee, Real Estate Company Ltd and Property Developers (Pvt) Ltd (F&G – PDL and RECL) received a wakeup call this week with the announcement of an entry of a foreign investor backed by a payment plan made by the Independent Association of Depositors of F & G – PDL & RECL.
Association President C. Caldera told a media conference in Colombo on Monday that they have an expression of interest for an investment of $55 million to infuse capital into the two collapsed companies with a view to resurrecting both entities as a real estate company.
The company will generate funds to repay depositors of PDL and RECL with 51 per cent and 61 per cent of their investments respectively within a period of six months, he said, adding that he is optimistic that they will be able to complete repayment of 100 per cent of their security investments within a short period of time.
He disclosed that details of the investor by the name of Ms. Sri Widyathi, an Indonesian national with the backing of a UK based investment bank along with the payment plan for depositors, have been submitted to the Central Bank (CB).
If and when the CB approves the proposal, it would be presented to the Supreme Court on March 10.
The two companies have 4,800 depositors out of which 300 are high net worth depositors, he said, adding that the worth of total assets in both companies including deposits was around Rs. 7 billion.
During the past two years, depositors had to wait in vain, as the Supreme Court Fundamental rights case on the F & G – PDL & RECL matter was postponed on each and every day it was taken up for hearing without any directive from the judiciary, he added.
Meanwhile Neelanie Goonetillake, President of the F&G Depositors Association, told the Business Times that many efforts had been made earlier by the two boards of trustees appointed by the Supreme Court to realise the assets and make repayments for depositors in accordance with a reliable payment plan.
She noted that in 2010 October, the Supreme Court ordered to set up two trusts to promptly repay the depositors after a one year struggle and a court battle. The two companies along with the F&G licence company had collapsed due to run of deposits with the fall of GK in December 2008.
“The trustees took great pain in finding the assets of the two companies and carried out valuations and transfer of properties while making repayment for the sick and needy as well as elderly persons for medical and critical illnesses amounting to Rs. 25 million in accordance with the mandate given to them by the judiciary under the trust deeds,” she said.
“Therefore it is wrong to say that the trustees have made no attempt to repay the depositors and in fact they have identified, documented and cleared legal and mortgage issues of most of the assets of the companies,” she disclosed.
In 2012 April, a comprehensive repayment plan was prepared by former directors of the two companies after a series of extensive discussions and involvement with the trustees and the advisory committee.
The plan was submitted to the Supreme Court and the former directors signed an agreement with the trustees in December 2012 to implement the plan, according to documents which are in the possession of the Business Times.
Ms. Goonetillake noted that at that time it was a very viable plan as the former directors were capable of reviving the company and making money by selling assets and operating the real estate business.
The two trusts also agreed to the proposal of settlement of deposits based on the ratio 45: 55 in relation to cash and shares, she said.
But that didn’t work as there was a dispute among members of the association.