Major restructuring plan for Vanik

Hiran H. Senewiratne

RESTRUCTURING: Vanik, undergoing a major financial crisis for a long time, has forwarded a restructuring plan requesting on institutional lenders converting part of its debt into equity, its Chief Executive Officer (CEO) Justin Meegoda told the Daily News.

He said that equity would attract lenders to the company, which would reduce the share capital's par value from Rs 10 to Rs. one. "Under these circumstances the company's total share capital will drop from Rs. 750 million to Rs. 72 million." Therefore, lenders will also waive off the accrued interest rates and the balance-unconverted debts will be paid in three years, he said.

The company is having an outstanding debt of Rs. 2.2 billion and 60 per cent to 70 per cent of them could be settled through the equity while the balance will be settled in three years, Meegoda said.

Once the restructuring plan is in place, all net asset value which are negative would be turned positive benefiting all stakeholders in the company including shareholders.

According to Meegoda, there are more than 24,000 shareholders in the company which benefits nobody, due to the subtle price manipulation by some elements when trading at the Stock Market which was a heavy disadvantage for the company.

This proposed restructuring proposal filed in Court is to implement it.

A resolution has been forwarded by two shareholders to be appointed to the Director Board who acquired a 10 per cent stake of Vanik sometime back.

"We found that both resolutions to remove and appoint new directors were defective which is in accordance with the Company Law who have a stake of 10 per cent each," he said.

Meegoda said that if they want to take over Vanik's management they cannot do so through hooliganism. Two resolutions were initiated by CareKleen (Pvt) Ltd and Premier Investment (Pvt) Ltd that owned a 10 percent stake of Vanik.

The Court has sanctioned to call a meeting on October 24 and if 75 per cent of members agree with me, I could go ahead with the proposed restructuring plans, Meegoda said.