Sri Lanka’s Watawala Plantations ends management deal

Mar 18, 2014 (LBO) - Sri Lanka's Watawala Plantations Plc said a management agreement with Estate Management Services (Pvt) Ltd, its key shareholder has been ended.
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In Sri Lanka's commercial tea plantations date back from the British colonial era where third party 'agency houses' used to charge management fees on an arm's length basis.
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The firm said in a stock exchange filing that management fees will no longer paid the Estate Management Services and the company itself will manage it.

The management fees paid by plantations company is a legacy of a privatization process, where the fees were structured to provide cash flow to finance an indirect leveraged buyout of the firms by its managing agent.

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The practice has been blamed by analysts for draining resources needed for capital expenditure.


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