Sri Lanka stocks close higher; windfall for Ceylon Theatres, Cargills stockholders

Mar 25, 2008 (LBO) – Sri Lanka stocks closed higher with the value of two illiquid Ceylon Theatres group firms rising steeply after a record share split which left stockholders richer by 6.6 billion rupees on Tuesday. In bond markets the Central Bank rejected all bids at the auction held to sell 22 month and 35 month bonds.

Updated Ceylon Theatres, which recently merged with group company Millers, announced a 70 to one split which sent its share price up by 45 percent to 4,500 rupees. The company’s stock market value went up by 3.1 billion rupees to 10.1 billion.

Cargills Ceylon, another group company, said its chairman Anthony Page was retiring to make way for Louis Rajkumar Page, another family member.

Both Ceylon Theatres and Cargills are controlled by the Page family.

Cargills also announced a 40 to one split that sent its share up 46 percent to close at 1,790 rupees.

The company’s stock market value rose 3.4 billion, leaving shareholders of both firms richer by 6.6 billion by the end of the day.

Share splits do not increase the assets of the firm, but a split reduces the nominal price of the share making it more accessible for investors and the increased liquidity drives up demand for the share.

In the broader market the benchmark All Share index closed up 0.78 percent (19.74 points) while the more liquid Milanka closed down 0.25 percent (8 points).

Sri Lanka Telecom slipped 25 cents to close at 40.00 rupees while uncertainty about the sale of a stake by NTT Communications to Malaysia’s Usaha Tegas group continued.

John Keells Holdings closed down one rupee at 119; Dialog Telekom was flat at 17.00 rupees and Asiri Hospitals was down 1.25 at 58.00 rupees.