July 12, 2007 (LBO) – Asian Finance is planning a merger with its parent company, Lanka Ratings (LRA) said, while confirming a negative outlook on the firm’s rating due to its high exposure to the share market. Lanka Ratings Agency confirmed BBB3 investment grade rating of Asian Finance.
“The negative outlook is premised on the changing risk profile of the Company, as reflected by its substantial investments in shares and subsequent provisions for losses, coupled with increased real-estate investments and the resultant concentration risk,” LRA said.
“These had weakened the capitalisation position of Asian Finance during the year under review.”
LRA says Asian Finance is due to merge with Ceylinco Securities and Financial Services, its parent.
“The boards of both entities have agreed to the merger in principal, and are now awaiting approval from the relevant authorities,” LRA said.
LRA said the assets and liabilities of Asian Finance will be transferred to Ceylinco Securities and Financial Services and LRA will stop issuing ratings on the firm.
The firm’s gross investment in quoted shares had increased from 8.99 million rupees to 61.04 million rupees in the year ended Ma