Touchwood goes for Rs 532 m rights issue

Harshini PERERA

Touchwood Investments will go for a rights issue to raise Rs 532 million.

The capital raised will be invested on increasing the asset base and buffer stocks in the future.

Channa Abeygunawardena

The rights issue has been approved by the Colombo Stock Exchange and shareholders. A share will be issued at Rs 60. It traded at Rs 128.50 on May 14, Touchwood Investments CEO, Channa Abeygunawardena told Daily News Business.

Under the terms of the Touchwood Investments rights issue, investors are eligible for one new ordinary share for every ordinary Touchwood share currently held by them.

This step was a natural corollary to the growing demand for the agro-afforestation model that Touchwood exemplifies.

Following the rights issue, Touchwood will be in a position to invest in opportunities for backward and forward integration. The funds will be further invested in strengthening the brand image and improving efficiency to create stakeholder value now and in the future. “Due to the resilient factors in the market, the interest for investments in timber has increased rapidly during the past six months,” he said.

Touchwood has started paying returns to the client from 2007. Compared with the other timber investors in other countries, Touchwood is on target and it has a 1:3 asset liability ratio. The issue will commence on May 31 this year and will close on June 8.

The 17.8 million shares will become 71.3 million after the share split which is subject to shareholder approval.

Abeygunawardena said five species are being researched by the research and development division in the agro-forestry sector. Touchwood expects to export only value added products.

“We have harvested vanilla production and are actively looking at potential markets especially in the perfume industry. We have recognized Saudi Arabia and India as potential markets for vanilla essence,” he said.

With these investments, Touchwood will go into a massive expansion and spend on research, development and high-tech equipment.