MTD Walkers (KAPI) restructures debentures due September 30th, changes auditors

September 28, 2018 (LBO) – In Colombo Stock Exchange (CSE) filings filings released today, listed construction company MTD Walkers (KAPI), announced a restructuring of maturing debentures, change of auditor, and 2 directors deciding not to stand for re-election.

Prominent directors Niranjan Deva Aditya and Albert Rasiah have decided not to stand for re-election at the recently concluded annual general meeting, effectively retiring from the board of directors on September 27th.

Also announced at the AGM, BDO partners was named Auditor, replacing global accounting firm Ernst & Young.  Market participants see this change as an effective downgrade in the audit credibility of the firm.

Debentures worth Rs2.1bn due to mature on September 30th were restructed, stretching out repayment of the majority of the debentures for an extra year.  This amendment of the debenture trust deed was approved by 3/4 of the debenture holders, and came with concessions of higher interest rates, and a buyback of a portion of the maturing debentures.

As many of the debenture holders are likely state institutions, the restructuring of the debentures is viewed by some analysts as a stealth government bailout of the firm.  A bailout would make sense in order to avert insolvency of a firm which owes tens of billions to state banks.  The company explained the restructuring as necessary to better align the company’s debt obligations with cash flows from ongoing projects.