The Finance to infuse fresh capital

CBSL wants new Director Board representing shareholders:

The Central Bank

The Monetary Board of the Central Bank of Sri Lanka has decided to recapitalize The Finance Company PLC (TFC) to facilitate smooth operations of the company in the future, the Central Bank said. It has also been decided that the company must be managed by a capable Board of Directors representing shareholders so that the Managing Agent could exit from the operations of TFC as soon as normalcy has been restored.

The Monetary Board has directed TFC to invite new investors to infuse fresh capital in the form of 40 million ordinary shares at Rs 40 each towards such objective.

It has called TFC to attract strategic investors capable of infusing funds and playing an effective leadership role in managing TFC.

The scheme will provide an opportunity for 10 percent of the existing deposits in TFC to be converted into 100 million non-voting shares of Rs 20 each, thereby converting deposits in the sum of Rs 2 billion into equity. This will enable depositors to have an equity stake in TFC, which is already a listed company. It will also enable TFC to reduce its current liabilities and improve its balance sheet.

The TFC Director Board and the Managing Agent have been directed to implement the above scheme by December 15.

In accordance with this direction, TFC will be expected to make the formal invitation to investors in due course.

The CBSL will oversee the implementation of the above measures as well as ensure an equitable allocation of shares among investors in the interest of long term stability of the company and the financial system, the Central Bank said in a statement.