Hayleys MGT proposes Rs 914 million rights issue

Hayleys MGT Knitting Mills PLC has announced plans to float a rights issue to raise Rs 914 million for expansion and to strengthen the company’s balance sheet, subject to Colombo Stock Exchange (CSE) and shareholder approval.

The Board of Directors of the company has proposed the issue of two new ordinary shares for every ordinary share held, at Rs 9 per share. The current stated capital of the company is Rs 527,856,000 represented by 50,781,106 ordinary shares.

The announcement of the proposed rights issue came as Hayleys PLC, the major shareholder in Hayleys MGT Knitting Mills, reported record nine month net profits of Rs 3.6 billion, even after losses incurred by its textile operation, which is undergoing restructuring.

In a filing with the Colombo Stock Exchange, the Board of Directors of Hayleys MGT Knitting Mills said the proceeds of the proposed rights issue would be used to strengthen the company’s balance sheet, invest in equipment to manufacture higher value fabric, invest on energy saving initiatives and upgrade its Enterprise Resource Planning (ERP) System.

Commenting on the proposed rights issue, Hayleys PLC Chairman Mohan Pandithage said, “This rights issue reflects our confidence in the future of the company, and the management’s determination to set the company back on the path to profits,” he added. “We have in the recent past taken many initiatives including assignment of the best management resources available within Hayleys to focus on the turnaround efforts, reduction of manning levels, tightening of manufacturing and business processes so as to improve efficiencies and deliver on customer expectations,” he said.