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June 7 (Dow Jones) - Sri Lanka's Richard Pieris & Co. said Wednesday it would make a capital gain of 125 million rupees (1.2 million dollars) from the sale of a 21 percent stake in listed Associated Motorways. The diversified company sold its entire stake of 1.75 million shares in Associated Motorways for around 578 million rupees, or 330 each rupees, on the Colombo bourse earlier Wednesday.

Richard Pieris bought the stake in September 2005 for around 260 rupees a share.

"We have exited the stock as part of a realignment of our equity portfolio and because we were in need of cash," said Pravir Samarasinghe, the group's chief operating officer.

Samarasinghe said the capital gains will be used to retire some of the group's hefty debts which he estimated at around 6.5 billion rupees.

Richard Pieris's main business is manufacturing, mostly rubber-based household and industrial products that it sells through retail outlets across Sri Lanka. It also has interests in tire retreading. Analysts say the group's initial objective may have been to obtain control of the profitable local motoring company, and that it may have exited after facing difficulties raising its stake because membe