Perpetual Treasuries can’t subscribe for NDB Rights Issue
National Development Bank (NDB) is offering shares of under fire Perpetual Treasuries Ltd (PTL), holding some 7 million shares of its Rights Issue to prospective buyers as PTL will not be subscribing for them, informed sources say.
From left: Ranasinghege Semasinghe (Director), Ms. Kimarli Fernando (Director), Ashok Pathirage (Director/Deputy Chairman), Ananda W. Atukorala (Chairman), Dimantha Seneviratne (Director/CEO), Sarath Wikramanayake (Director), Ms. Indrani Sugathadasa (Director), Sriyan Cooray (Director) and Shehani Ranasinghe (Vice President, Company Secretary) at the EGM.
The Financial Intelligence Unit of the Central Bank late last year ordered banks to freeze the accounts of firms related to Arjun Aloysius’ PTL to prevent the siphoning off of money gained from the infamous bond scam. As a result assets frozen included all cash on credit to the Perpetual Treasuries, CB and other banks, shares of NDB and Rs. 640 million paid to shareholders.
As at 2016, Perpetual Treasuries has over 6.2 million shares which is 3.77 per cent of the total number of shares at NDB. Another subsidiary Perpetual Equity has 2.44 per cent of NDB bringing the total at 6.21 per cent.
NDB’s Rs.6.2 billion, 1 for 3 Rights Issue at Rs. 105 per share was approved at their EGM on Tuesday. Shortly after this NDB Chairman Ananda Atukorala told the Business Times that NDB will be writing to all their shareholders offering them these rights. “The unsubscribed shares will be offered to either existing or new buyers who may be local or foreign,” he said.
He added NDB is keen to find a strategic partnership with foreign investors and already certain venture capital and foreign funds are discussing with them to subscribe for the Rights Issue.
NDB share price was Rs. 132.70 when the Rights issue was announced on June 6. NDB traded at over Rs. 260 three years ago.
NDB has two foreign funds among its top 20 shareholders as at 30 June 2018. At number 10 is SBI VEN Holdings with 5,371,628 shares (3.03 per cent) and at number 11 is Ruffer Pacific Fund with 5,210,479 shares (2.94 per cent).
The Rights Issue proceeds would be utilised to further strengthen NDB’s equity base and thereby its capital adequacy along with part financing the growth in the loan portfolio. As at March 31, 2018 NDB’s tier I capital ratio stood at 8.73 per cent above the regulatory minimum of 7.875 per cent which will increase to 8.5 per cent by January.
Its tier II ratio stood at 13.35 per cent against the regulatory minimum of 11.875 per cent slated to rise to 12.5 per cent in three months when BASEL III comes into effect.
Meanwhile a media release from the bank said: “Shareholders of the NDB approved raising capital of over Rs. 6.2 billion via a Rights Issue at its recent EGM held at the NDB-EDB Tower in Colombo. The funds to be raised are primarily to supplement growth and to improve the bank’s Tier I capital adequacy levels. NDB shareholders and the bank’s Board of Directors were present at the EGM. Accordingly, up to 59,154,354 new ordinary voting shares were issued by NDB by way of a Rights Issue to the shareholders as at the end of trading on September 11 in the proportion of 1:3 ratio at an issue price of Rs. 105. The Rights Issue was unanimously passed by the shareholders by way of an ordinary resolution.”