Giving Hope

CEAT Kelani Holdings Managing Director Ravi Dadlani (right) and Lanka Ashok Leyland CEO Umesh Gautham exchange the OEM agreement

August 23, 2006 (LBO) – Vanik Inc., Wednesday offered creditors a chance of swapping their debt in return for equity, and also disclosed plans to reduce the par value of its stock. Meegoda later informed the stock exchange that the shareholder who sought an EGM had sold out. The ailing firm has sought a meeting with creditors seeking permission to write off their interest accrued.

Creditors have an option of:
¢ converting the balance capital into equity immediately or
¢ be repaid in full over a three-year period starting 2007 or
¢ being repaid at 12 percent interest up to Dec. 31, 2009, after which it will be converted into an equity stake in Vanik

“..creditors will have a better chance to recover their monies in full in a shorter period of time,” explained Vanik’s President and Chief Executive Officer, Justin Meegoda.

Vanik’s creditors include institutional, money market instrument holders and its debenture holders.

The scheme does not cover creditors in respect of statutory liabilities, accrued expenses and monies due to Vanik’s staff.

Concurrently to the debt to equity swap, Vanik’s board plans to reduce its 10 rupee share to 1-rupe

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