The Central Bank (CB) this week cancelled the plan to offer a single, sizable stake in crisis-hit Seylan Bank, asked the bank to offer the shares to the public and extended the term of the board of directors for another three years, officials said.
The announcement came on Friday, a few days after the CB said it had postponed the decision on deciding on the bid offer made by one party. The company has not been named so far but analysts said it was LOLC.
Officials said the CB has asked Seylan to see whether state institutions can take up the 33 % stake with Sri Lanka Insurance (SLI), now a government entity, being one institution that is interested.
They said the CB had issues with LOLC’s proposal in terms of the structure and also the pricing. “Initially when we announced the Expressions of Interest (EoI) we only wanted the bidders to bid for voting and non voting shares.
Then when some representations were made, we opened it up and allowed for other classifications like convertible preference shares, which LOLC had put down in their bid. But here we had an issue with their pricing together with their structuring of these shares,” one official explained.
Seylan has been asked to raise Rs 3 billion through an appropriate number of voting shares by end August 2009. “The existing shareholders and other new local and foreign investors too, could participate in the new share issue, which is expected to take place in August,” the CB said in a statement adding that the Bank of Ceylon has been asked to continue with its managerial assistance to Seylan until the Monetary Board decides to discontinue with such assistance.
The current board comprises Eastman Narangoda (chairman), R. Nadarajah (executive director), Nihal Jayamanne P.C., Lalith Withana, N.Goonewardena and Rear Admiral (Retd), B.A.J.G. Peiris. Officials said another three directors would be added on to the board after the share issue. |
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