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USD 80 million private placement by JKH in fund-raising bid with ADB

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Krishan Balendra, Chairman JKH

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

Phase 1:

▪ 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.



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President AKD’s top level talks in Kuwait focus on bilateral cooperation

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President Anura Kumara Dissanayake meets Kuwaiti Prime Minister Sheikh Ahmad Abdullah Al Ahmad Al Sabah

By Ifham Nizam

President Anura Kumara Dissanayake on Tuesday met with Sheikh Ahmad Abdullah Al Ahmad Al Sabah, the Prime Minister of Kuwait, to discuss Sri Lanka’s political and financial stability and explore avenues for enhanced bilateral cooperation.

The Island Financial Review reliably learns that discussions emphasized investment opportunities in Sri Lanka’s tourism sector, reflecting the nation’s commitment to economic revitalization.

Officials close to President Dissanayake highlighted the significance of Kuwait’s support in securing the International Monetary Fund (IMF) loan facility, which has been instrumental in Sri Lanka’s economic recovery efforts.

They noted that the President expressed his gratitude to the Kuwaiti leadership for their assistance during challenging times.

The meeting underscored the mutual interest in strengthening trade relations between Sri Lanka and Kuwait.

Both leaders acknowledged the potential for increased collaboration in various sectors, with a particular focus on tourism.

Sri Lanka’s current political and financial stability presents promising opportunities for Kuwaiti investors seeking to explore the island’s burgeoning tourism industry.

This engagement aligns with President Dissanayake’s broader strategy to bolster international partnerships and attract foreign investment to drive economic growth.

By fostering closer ties with nations like Kuwait, Sri Lanka aims to enhance its economic prospects and ensure sustainable development in the coming years.

The discussions with the Kuwaiti Prime Minister are expected to pave the way for future collaborations, contributing to the strengthening of bilateral relations and the realization of shared economic objectives, an official said.

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Nationwide blackout on Sunday was due to mafia or incompetency: activists

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The official explanation that a monkey caused the outage has been widely ridiculed

By Sanath Nanayakkare

Last Sunday’s nationwide power failure in Sri Lanka has sparked significant criticism and speculation, with activists and experts questioning the official explanations provided by the government and the Ceylon Electricity Board (CEB).

The outage, which occurred on Sunday, February 9, 2024, has been attributed by Energy Minister Kumara Jayakody to a monkey colliding with the Panadura grid substation, causing a system imbalance. However, this explanation has been met with skepticism and outright dismissal by various stakeholders.

Malaka Wickramasinghe, Chairman of the Lanka Electricity Employees’ Federation, dismissed the notion (on February 12) that a minor technical failure or a simple short circuit could result in a nationwide blackout. He suggested that there might be an ulterior motive behind the outage, drawing parallels to past incidents where power failures were allegedly used for political leverage. Wickramasinghe pointed out that the government elected in 2015 faced similar issues in 2016, and the president elected in 2022 also encountered problems with power cuts early in his tenure. He emphasized the need for a thorough investigation, possibly involving the Defense Ministry, to uncover the true cause of the outage. Wickramasinghe also highlighted the economic damage caused by such outages and called for affected individuals to be compensated.

M.P.K. Wanigasinghe, Chairman of the National Consumers’ Front, criticized the current government for continuing the policies of the previous administration in the power sector, despite having rejected those policies when they came to power. This, he suggested, indicates a lack of genuine reform or improvement in the sector.

Nandana Udayakumara, Deputy Chairman of the Engineers’ Association, raised concerns about the CEB’s handling of renewable energy (RE) integration. He referenced a 2022 report by the CEB, which indicated that 2,600 megawatts of RE could be added to the grid without issues. However, only 1,400 megawatts have been added so far and the overloading has occurred too soon. Udayakumara suggested that the recent outage might reflect either a bias against renewable energy or incompetence among higher officials in the CEB.

The official explanation that a monkey caused the outage has been widely ridiculed, with many viewing it as an attempt to evade responsibility. The incident has underscored the fragility of Sri Lanka’s power infrastructure and the need for more robust systems and accountability. As the CEB works to restore full capacity to the national grid by February 14, the public and various stakeholders are calling for more transparency and effective solutions to prevent future outages.

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BOC launches ‘Rewardz Plus’ points-based reward scheme for credit cardholders

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The Bank of Ceylon (BOC) recently introduced a points-based rewards scheme, ‘Rewardz Plus,’ aimed at providing added value to its credit cardholders while enhancing customer engagement and loyalty. The launching event of the service, which was held at BOC Head office, was graced by Kavinda De Zoysa Chairman, Russel Fonseka General Manager/ CEO, and corporate and executive management of BOC. Initially rolled out for credit cards, the scheme is designed to encourage increased usage and reward customers through a structured points accumulation and redemption system.

‘Rewardz Plus’ allows credit cardholders to earn points, based on their spending. Customers can redeem their accumulated points through a range of options available via the

rewardzplus.boc.lk.These options include purchasing e-vouchers from registered merchants and service providers, shopping online at selected stores, booking flights and hotels, and offsetting bills at participating merchants.

Speaking on the launch, Deputy General Manager (Product and Banking Development) Mr. Y A Jayathilake of Bank of Ceylon stated, ‘’Introducing ‘Rewardz Plus’ offers our credit cardholders an opportunity to get more value from their everyday spending. This initiative is designed to provide greater flexibility and convenience, allowing customers to redeem points across a variety of options, from travel to shopping and bill payments. We believe this program will encourage increased engagement with our credit card customers while recognizing and rewarding them.”

BOC has been rewarding its payment cards users by way of various programs such as Seasonal discounts and throughout the year discounts at supermarkets, hotels and restaurants. With the introduction of ‘ Rewardz Plus’ the credit card customers will be able to enjoy more benefits in addition to those discount programs.

For over 85 years, Bank of Ceylon has been a cornerstone of Sri Lanka’s financial landscape, connecting individuals and businesses to global opportunities. BOC’s extensive network with over 2,300 touch points spread across the nation, ensures that bank’s customers have convenient access to a wide range of financial services. Moreover BOC was ranked as the only Sri Lankan Bank among the Top 1000 World Banks 2024 and the Banker of the Year 2021,2023 and 2024 by The Banker Magazine UK, The Number 1 Banking Brand in Sri Lanka by Brand Finance Lanka. BOC also received the People’s Banking Services Brand of the year at the SLIM KANTAR Peoples Awards 2024.Internationally, Bank of Ceylon has established a strong presence in key locations such as a Subsidiary in London, UK; branches in Male and Hulhumalé in the Maldives; Chennai, India; and the Seychelles.

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