Apr 04, 2017 (LBO) – Sri Lanka’s Agalawatte Plantations has resolved to take legal actions against the previous management shortly to recover the funds misappropriated during their tenure of office.
In a circular to shareholders, the current director board said that any such funds recovered will be utilized to settle the outstanding balances of the stake holders.
The accumulated losses of the company based on the draft financial statements as at 31st December 2016 is expected to be over 1.2 billion rupees.
The total outstanding statutory liabilities, amounts due to banks and other financial institutions and the amounts due to trade and other creditors as at 31st December 2016 is expected to be over 3.3 billion rupees.
“This catastrophic situation faced by the company had arisen as a direct result of misappropriation of company’s assets by the previous management.”
“It’s also pure negligence in maintaining the state owned assets leased to the company.”
Therefore, the Directors are proposing the following restructuring plan to resurrect the company, bearing in mind their responsibility for the livelihood of the 5,000 employees.
1. The Ministry of Plantations Industries (PMMD) will be requested to recommend to the Golden Shareholder to extend the Company leases for a further period of 46 years at the expiration of the current 53 year lease, which is imperative to the current major shareholder to make a substantial investment in the Company. This will give the present major shareholder a reasonable period to recover the investment made, over the balance term of the lease.
2. The Ministry of Plantations Industries (PMMD) will be requested to recommend to the Golden Shareholder to grant a 5 year period to settle the outstanding Government lease rentals while providing a 50% moratorium on the current lease rentals for period of 5 years until all past bank liabilities are settled.
3. The Commissioner of Labour will be requested to waive off all surcharges imposed on outstanding EPF & ETF liabilities on settlement of the outstanding joint contributions.
4. The Company will request a complete write-off of interest outstanding due to the Banks and other Financial Institutions up to 31st March 2017, on all the outstanding borrowings, including the overdue interest and recapitalized interest.
5. The Company will request all the Banks and other Financial Institutions to agree on a 5 year repayment plan for settlement of the balance capital outstanding at a concessionary interest rate of 4% per annum.
6. On reaching an agreement on the above restructuring plan the Company will settle 25% of the outstanding capital amounts due to all the Banks and other Financial Institutions as a bullet payment by 31st March 2017.
7. The Current major Shareholder will be requested to inject an amount of Rs 1.0Bn as share capital, by way of a rights issue to implement the above debt/ equity restructuring plan.
8. The Company will ensure settlement of outstanding dues as per the agreed plan if all the Banks and other Financial Institutions agree to adhere to the above plan.
In order to meet the above re-payment plan of the lending institutions and also to settle the past creditors outstanding, the company requires to generate approximately Rs 400Mn per annum additional cash inflow during the next 5 years.
The current Board further said that they are committed to execute the above proposals if all the stakeholders are agreeable to this plan.
This proposal has been accepted by D R Investment private limited, the majority shareholder of the company by whom a mandatory offer is being made to the shareholders.