May 21, 2008 (LBO) – Chilaw Plantations, a Sri Lanka government owned plantation that was under private management, would be taken back to state control before the end of the month, a senior government official said. Though the bulk of the plantations are now in private hands, some plantations, including Elkaduwa Plantations in the Matale district and some residual estates owned by two state agencies that ran the plantations, are still in state hands.
Though tea plantations in private hands are now again paying taxes to the government and are no longer a burden on the ordinary people, the finances of some estates have been hit by high ‘management fees’.
The management fees were allowed for private firms to effectively structure a backdoor leveraged buyout to take over the estates.
The management firms borrowed money to pay for the plantations and used the fee cash flows to repay the loans. Wayamba Plantations, which was the private managing agent, would be compensated with 124 million rupees for terminating the contract early, the official said.
Wayamba Plantations was one of two companies whose privatizations were de-railed after the government refused to carry out the second stage of transferrin