USD 80 million private placement by JKH in fund-raising bid with ADB
The Board of Directors of John Keellls Holdings has resolved to raise funds through a private placement for a maximum cumulative amount of the Sri Lanka rupee equivalent of USD 80 million to the Asian Development Bank through issuance of up to a maximum of 122,500,000 new ordinary shares of the company in two phases, Deputy Chairman/Group Finance Director Gihan Cooray said in a letter addressed to the Chief Regulatory Officer of the CSE Renuke Wijayawardhane.
Text of the letter:
The Board of Directors of John Keells Holdings PLC (“JKH”; the “Company”) resolved to raise funds through a private placement for a maximum cumulative amount of the Sri Lankan Rupee (LKR) equivalent of USD 80 million to Asian Development Bank (“ADB”) through the issuance of up to a maximum of 122,500,000 new ordinary shares of the Company in two phases, collectively the “Proposed Private Placement”, which will be a maximum post-issue dilution of 8.5 per cent.
The Proposed Private Placement would be for an upfront issue of ordinary shares (“Initial Placement Shares”) for an initial issue size of LKR equivalent of USD 50 million (“Phase 1”). At the time of issue of the Initial Placement Shares, the Company will also issue to ADB non-tradable/non-transferable options (“Options”) which will entitle ADB, at its option and discretion, to subscribe for additional new ordinary shares of the Company (“Option Shares”) within a period of 12 months from the date of subscription for the Initial Placement Shares, for an investment amount of up to the LKR equivalent of USD 30 million (“Phase 2”).
The issue of shares by way of the Proposed Private Placement is subject to the Securities Exchange Commission and the Colombo Stock Exchange (“CSE”) approving in principle the issue and listing of such shares, the Company obtaining shareholder approval at an Extraordinary General Meeting, approval of ADB’s Board of Directors and conformance with regulatory requirements, as applicable to the parties.
Salient features of the Proposed Private Placement are provided below.
Investor: Asian Development Bank
▪ Issue Size LKR equivalent of USD 50 million
▪ Issue Price LKR 154.50 per share (the closing market price as at 19 November 2021).
The Issue Price is approximately a 10 per cent premium compared to the 90-day volume weighted average price of LKR 141.00 per share.
▪ Initial Placement Shares Number of shares arrived at by dividing the LKR equivalent of USD 50 million by the Issue Price of LKR 154.50 per share.
The current stated capital and number of ordinary shares in circulation of the Company is Rs. 63,121,732,310.83 and 1,319,776,451 ordinary shares, respectively.
Company No. PQ 14
The number of shares to be issued would depend on the exchange rate as at the date of subscription. For example, if the exchange rate of LKR 202.192/USD as of the date of this announcement remains at the time of subscription, this will amount to 65,434,304 Initial Placement Shares resulting in a post-issue dilution of 4.7% in Phase 1.
▪ Options The maximum number of Options to be issued will be in the ratio of 3 Options for every 5 Initial Placement Shares, subject to being within the threshold of the Total Placement Shares as stated below.
For example, if the Initial Placement Shares is 65,434,304, ADB will be entitled to 39,260,583 Options, which if exercised in full will result in a further post-issue dilution of 2.8 per cent, taking the total post-issue dilution to 7.3 per cent.
Phase 2 (in the event Options are exercised):
▪ Issue Size LKR equivalent of up to USD 30 million (subject to the maximum number of shares to be issued to ADB as indicated below)
▪ Option Exercise Price Volume weighted average price of the Company’s ordinary shares as quoted on the CSE during the 90 calendar days ending immediately prior to the option exercise date. The Option Exercise Price is subject to a minimum of LKR 165.00 per share and maximum of LKR 200.00 per share.
▪ Option Exercise Period The Options will be exercisable during a 3 month window post the completion of 9 months from the date of subscription of the Initial Placement Shares. This entitlement will expire 12 months from the date of subscription of the Initial Placement Shares.
▪ Option Shares Each Option will be convertible to one Option Share during the Exercise Period, subject to the Total Placement Shares being within the threshold, as stated below, which will not exceed a post-issue dilution cap of 8.5 per cent. The number of Option Shares will also be capped at a total ADB investment not exceeding USD 30 million which would be converted to LKR at the prevailing exchange rate at the time the Options are exercised.
Proposed Private Placement with both phases (in the event Options are fully exercised)
▪ Total Placement Shares: Up to a maximum of 122,500,000 new fully paid ordinary shares to be issued by the Company under Phase 1 and Phase 2, collectively.
Both Initial Placement Shares and Option Shares will rank pari passu with the existing ordinary shares of the Company.
▪ Maximum Post Issue Dilution: Up to a maximum dilution of 8.5 per cent post issue of ordinary shares under Phase 1 and Phase 2, collectively.
The flexibility to issue shares up to a maximum of 122,500,000 shares is due to the Issue Size being dependent on the exchange rate prevailing at the time of subscription under both phases, and the Option Exercise Price being variable (within the range of LKR 165.00 and LKR 200.00) at the time of exercise under Phase 2.
The proceeds from this transaction will be utilised for the purpose of corporate level balance sheet support towards funding its investments in the “Keells” Supermarket business which includes the long-term outlet expansion plan including construction and equipment, start-up expenses and the construction and equipping of the supporting logistics infrastructure to facilitate this.
Company No. PQ 14
Further, the Proposed Private Placement will afford the Group the flexibility and agility to fund its investments in an optimal manner, whilst providing additional support to the Group’s liquidity position, particularly in terms of providing further leeway to manage the foreign currency commitments of the Group’s landmark projects such as the ‘Cinnamon Life’ integrated resort and the West Container Terminal in the Port of Colombo. In addition, given ADB’s investment mandate pursuant to which private sector projects must have clear development impacts and positive externalities, particularly in environmental, social and governance (“ESG”) aspects, JKH will leverage on ADB’s technical expertise and advisory to enhance and further strengthen the Group’s existing ESG processes and frameworks to reach best in class benchmarks. The Group believes that partnering with an internationally reputed financial institution such as the ADB, particularly at this juncture of time, is a vote of confidence for JKH and the country.
‘Govt. lacks mechanism to recover USD 40 billion spirited out of SL from 2008 to 2018’
By Hiran H.Senewiratne
The government doesn’t have any mechanism to recover the USD 40 billion that was siphoned out of the country illegally from 2008 to 2018 by Sri Lanka’s business elites, Senior Lecturer, Department of Economics, University of Peradeniya Dr. Kalpa Rajapaksha said.
“Most people think that the IMF loan is a victory for Sri Lanka without knowing its risk factors. These are exceptionally high because one of the main impacts would be for the banking sector whose liquidity is due to weaken on account of high tax impositions and certain economic reforms, Dr. Rajapaksha told The Island Financial Review.
Dr. Rajapaksha added: ‘The tax relief given during President Gotabaya Rajapaksha’s tenure triggered this issue, which cost government coffers more than Rs 450 billion. However, Sri Lanka has to carefully follow IMF recommendations taking its history into consideration. It is said that Greece and Ethiopia and several other countries absolutely failed by following IMF recommendations in the past.
‘We are in the dark as to the method of economic recovery because the government is attending to deeper, burning issues in the country, such as reduction of poverty and ending economic inequities.
‘The imposition of heavy taxes on people, especially professionals, via a wealth tax and a heritage tax by 2025 and the increasing of direct taxes, such as VAT, on low income classes, without taking into account the need for a wage hike, will iraise the poverty level and widen wealth inequalities.
‘Inflation at the global level is very high and strategies are required to increase exports and cut down the heavy import dependency of the economy. This is a prerequisite to address all economic woes.
‘The previous ruling party squandered and stole billions of dollars but the present government not having any plan to recover that money is a tragedy. Therefore, promoting neo- liberal principles is impossible under the current corruption scenario.
‘Further, the IMF has set the target of reducing the debt to GDP ratio to 0.7 per cent in 2023, along with their recommendations. Many people doubt the achievability of these aims.’
Global banking sector instabilities affect local bourse
By Hiran H.Senewiratne
CSE trading got off to a positive start but later turned negative yesterday due to huge selling pressure. The reasons being investor worries over a domestic debt restructuring mechanism after having secured the IMF loan and the negative global scenario when it comes to the banking sector, market analysts said.
According to analysts, during the last week strategically important banks in the global economic system went through credit default swaps, especially Silicon Valley Bank, Signature Bank and Credit Suisse Group AG. But another leading European Corporate Bank possibly facing a credit default swap, created some ripple effects for economies like Sri Lanka, analysts said.
The All- Share Price Index went down by 134.1 points and S and P SL20 declined by 51.6 points. Turnover stood at Rs 871 million with two crossings. Those crossings were reported in NDB, which crossed 1.2 million shares to the tune of Rs 51.6 million; its shares traded at Rs 43 and Aitken Spence 772,000 shares crossed for Rs 47.1 million, its shares traded at Rs 61.
In the retail market top seven companies that mainly contributed to the turnover were, SLT Rs 82 million (717,000 shares traded), Browns Investments Rs 52.8 million (8.2 million shares traded), Lanka IOC Rs 50.1 million (298,000 shares traded), Tokyo Cement (Non- Voting) Rs 36.5 million (388,000 shares traded), Expolanka Holdings Rs 33.6 million (251,000 shares traded), ALC Cables Rs 33.3 million (406,000 shares traded) and Sunshine Holdings Rs 27.2 million (633,000 shares traded). During the day 45.4 million share volumes changed hands in 15000 transactions.
The market is generating revenue from SLT over news of it being divested; moreover, there has been interest for the hotel and tourism indexes, since tourist arrivals and earnings have been attractive, an analyst said.
It is said that Treasury bond yields opened steady on Monday, while the rupee opened weaker at spot market, dealers said.
A 01.07.2025 bond was quoted at 30.75/31.00 per cent on Monday, up from 30.90/31.20 per cent on Friday. A 15.09.2027 bond was quoted at 28.00/70 per cent, up from 28.00/50 per cent from Friday. The Sri Lanka rupee opened at 322/325 against the US dollar, weaker from 320/325 a day earlier.
Holding ‘Raid Amazones’ for second consecutive year in SL, a rare honour for her – Head of Marketing Srilankan Airlines
By Hiran H.Senewiratne
More than 250 female French athletes arrived in Sri Lanka for the challenging ‘Raid Amazones’ adventure event that took place last week in Kandy. They arrived in Sri Lanka for the second consecutive year, which was a big achievement for the country when it comes to the tourism sector, Head of Marketing SriLankan Airlines Saminda Perera said.
“For the first time in ‘Raid Amazones’ history they selected one country for two consecutive years, which could be considered a great honour for Sri Lanka. This would enable more French tourists to arrive in Sri Lanka in the future, Perera told the media recently during the event in Kandy. ‘Raid Amazones’ will hit the streets of the fabled hill capital, Kandy, with the participation of over 250 female athletes.
‘Raid Amazones’ is a well-known annual destination adventure event originating in France, which features female athletes competing their way through a range of challenges, such as, orienteering, mountain biking, canoeing, riding, running and archery.
“Sri Lanka was chosen over rival destinations by the event’s founders due to the unparalleled warmth of its people and support on the ground to pull off a successful event. Their decision is also due to SriLankan Airlines’ tireless marketing efforts to secure the popular trail on successive occasions for Sri Lanka in its hour of need for international tourism support, Perera said.
Tourism sources added: “During the 21st edition of the trail, the participants will be able to connect with a potpourri of natural and historical highlights as they trek through the Kandyan plateau in Central Sri Lanka.
“Their journey, though, would begin from the moment that they step onboard SriLankan Airlines to fly from Paris to Colombo, on an aircraft dedicated to ‘Raid Amazones 2023’.
“Named as a UNESCO World Heritage Site, Kandy, the iconic setting of ‘Raid Amazones 2023’, is renowned for two of the most recognizable cultural symbols that define Sri Lanka.
“SriLankan Airlines partnered Raid Amazones in 2022 soon after recommencing operations to Paris.
“SriLankan Airlines, together with Connaissance de Ceylan, the official ground- handling partner of the event, will go all out to ensure that the French group experiences the best in Sri Lankan hospitality.
“This event will especially help create more awareness of Sri Lanka as an adventure travel hotspot among French travellers and the rest of Europe, where ‘Raid Amazones’ is sought-after and attracts adventure-seekers.”
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