Sept 11, 2011 (LBO) – Sri Lanka’s Pelwatte Sugar Industries, which produces sugar and alcohol has made a 306 million cash call to fix its finances by selling one share for every four held by current shareholders. The firm said in a stock exchange filing that it had a stated capital of 679 million rupees but net assets were half that.
By June 2011, at company level the firm had 341 million rupees in net assets. It had 449 million rupees in borrowings at company level and 652 million at group level.
Pelwatte is now 46.8 percent owned by Melstacorp (Pvt) Ltd, a part of Distilleries Company of Sri Lanka, controlled by businessman Harry Jayewardene.
Distilleries could now procure a part of its ethyle alcohol needs through Pelwatte Sugar.
Analysts have said that the new owners also have a chance to curtail the use of Pelwatte brown sugar for illicit alcohol production. Cane based sugar production in Sri Lanka has had a chequeured history, starting as state-backed ventures and surving with import duty protection.
Activists have charged sugar firms of destroying eco-systems and causing heavy indebtedness among contract farmers.