Share Capital down from Rs. 1.2 b to Rs. 550.3 m to settle scheme creditors:

Vanik in Rs. 694.9 m capital reduction plan

Ravi Ladduwahetty

Debt ridden merchant bank- Vanik Incorporation Ltd has announced a proposed restructuring plan where the present share capital of Rs. 1.2 billion (Rs. 1,245, 335,556.00) will be reduced to Rs. 550.3 million (Rs. 550,365,096).

The value of the reduction of Rs. 694. 9 million (Rs. 694,970,460.00) is the value which has been lost or unrepresented by available assets. This is also the strategy that the company envisages implementing on the mode of settlement between the company and the scheme creditors while envisaging a reduction in the capital base.

“Vanik will also be advising shareholders, the nature and the extent of losses incurred by the company, the cause of the losses and the steps which are being taken by the Board of Directors to prevent further losses in terms of Section 220 of the Companies Act, No 7 of 2007 since the net assets of the company are less than half of the stated capital, Vanik President/ CEO Justin Meegoda told the Daily News Business yesterday.

He said the company will also seek the approval of the shareholders for reduction of the stated capital by Rs. 694.9 million (Rs. 694,970,460.00) without reducing the number of shares in issue which are 65,481,650 issued Ordinary Shares and 11,737,290 issued Non Voting (Class “X”) Shares and as a result of which the stated capital of the company will be Rs. 550.3 million (Rs. 550,365,096.00).

The restructuring plan will revolve round the reduction of capital, issue of new shares to scheme creditors as part settlement of the capital component of their debt, waiver of interest accrued to up to the effective date of the scheme by the scheme creditors and rescheduling of the remaining capital portion of debt not converted to equity.

The restructuring will also include the payment of future interest of the unconverted debt at the rate of 12.5 per cent per annum by issuing further new shares to the scheme creditors at the end of the repayment of the unconverted capital in full.

The restructuring plan will also see the implementation of the scheme of the divestment of certain investments of the company at targeted prices and the utilisation of the sales proceeds to service the remaining liabilities and to adequately capitalise the subsidiaries to enhance their cash generation capacity, Meegoda said.

Vanik Company Secretary Anusha Wijesinghe said the company has obtained approval from the Colombo Stock Exchange for the listing of the new ordinary shares (voting) to be issued to the scheme creditors subject to the shareholders’ approval of 1,586,065,802 shares in accordance with the scheme by way of Special Resolution.

The company will also be seeking the approval of the shareholders for the immediate issue of new ordinary shares to scheme creditors as part settlement of the debt due to them and the future issue of new ordinary shares on completion of three years from the effective date in settlement of the interest of the unconverted debt capital for the three-year period commencing from the effective date.