Audit report delay holds-up Vanik restructuring

Hiran H. Senewiratne

RESTRUCTURING: Vanik Incorporation Limited (VIL) said that they cannot go ahead with their proposed restructuring plans due to a long delay in the submission of their audit report by the relevant audit firm.

VIL is planning a major restructuring programme to erase the company’s debt and liabilities, while most creditors have approved either to waive off or reschedule interest, that amounts to Rs 2 billion, CEO, VIL Justin Meegoda said.

The company needs to get the approval from shareholders for this purpose.

However, they are unable to go ahead with their proposals due to long and unnecessary delays by the Audit firm.

The Vanik CEO complains that they took two and half months to start auditing their company and for some reasons they do not give priority for them, VIL CEO said.

He said to obtain shareholders’ approval the company needs to have the audited report to be forwarded before the shareholders to go ahead with proposed restructuring plans.

According to company sources they are intending holding an Extraordinary General Meeting probably after the Sinhala and Tamil New Year.

But due to the delay in releasing the audit report their restructuring programmes have come to a stand still.

The purpose of obtaining shareholders’ approval under the new restructuring plan is to issue new shares for creditors and to reduce capital, he said. Due to the delay in regard to the audit report creditors have waived off interest anticipating shareholders approval for the restructuring programme.

Meegoda said they could easily wipe out Rs 4.8 billion in deficits in the equity on the completion of the restructuring plan, benefiting more than 22,000 shareholders all over the country.

He also said the top 20 shareholders account for more than 51 per cent of the shareholding.

VIL is a listed company in the Colombo Stock Exchange and the running price of a share is around Rs 2.50.

Meegoda is optimistic that once the restructuring mechanisms are completed they could get actively involved in the merchant banking business and could fight back to regain their previous position within a short time span.