Kotagala Plantations raise one billion rupees from Sri Lanka listed debt

May 23, 2014 (LBO) – Sri Lanka’s Kotagala Plantations Plc said it had received orders of over a billion rupees for a stock exchange listed debenture offer. The firm planned to use 250 million rupees to repay an 18 percent term loan, 400 million rupees to settle an overdraft at 15.5 percent and 50 million rupees in broker advances and 300 million rupees for re-planting tea, rubber and oil palm.

The firm offered 5 million rupee debentures and a further 5 million if the first tranche was oversubscribed.

Interest on the debt is tax free.

The firm offered 4 year debt with coupon of 14.25 percent a year (annual effective rate of 14.76 percent), 5-year 14.50 percent debt (AER of 15.03-pct), 6-year 14.75 percent debt (AER 15.29-percent) and 7-year 15 percent debt (AER 15.56 percent)

Interest is paid every six months.

The secured debt was given an investment grade ‘BBB-‘ rating by RAM above its domestic speculative entity rating of BB+. The firm expects to set up a sinking fund to meet repayments.