The shoe manufacturer's 1:1 rights issue comprises of the issue of 12.5 million ordinary shares at 73 rupees per share together with 12.5 million warrants executable in 2011, 25 million warrants executable in 2014 and 25 million warrants executable in 2015.

The warrants are priced at 102 rupees, 118 rupees and 142 rupees per share.

The proceeds from the rights issue will be used for expansion and modernization of the manufacturing units of CLPL and to buy a 51 percent controlling stake in South Asia Textile Industries and 8.31 percent stake in Dankotuwa Porcelain.

The funds will also be used "for investments possibly in publicly listed as well as private companies in Sri Lanka," the statement said.

"The investments will be in 'distressed companies' which have potential to be revived and made profitable within a reasonable period of time with the introduction of capital, financial discipline, controls and management guidance."

CLPL chairman Lalith Heengama said the firm also "has plans to diversify and invest in other lucrative and growing industries with significant potential in order to achieve our strategic corporate objectives."

Environmental Resources Investment owns 72 percent of Ceylon Leather.