Takeover Watch

May 17, 2008 (LBO) – Fitch Sri Lanka has placed the 'A-(lka)' rated Commercial Leasing Company on credit watch after Lanka Orix Leasing Company (LOLC) gained 67 percent control of the firm.

CLC was started in 1988 by Commercial Bank of Ceylon PLC, Chemanex Limited, and Singer (Sri Lanka) Limited ('A+(lka)'/Negative). It has a network of 12 outlets.

LOLC, founded in 1980, is Sri Lanka's pioneer specialised leasing company. It has 22 branches. The family of Raja Nanayakkara holds 54 percent of the firm while Orix Corporation of Japan has 30 percent and the public 16 percent. Commercial Leasing was placed on rating watch evolving (RWE) indicating that the rating could be maintained, or changed after the acquisition by LOLC which is rated a notch higher at 'A(lka)'.

LOLC's rating has a 'stable' outlook. An LOLC commercial paper issue of 428 million rupees has been rated 'F1(lka)'.

LOLC bought a 67 percent stake in Commercial Leasing Company (CLC) from Commercial Bank of Ceylon (AA+(lka)/stable) and Chemanex for 1.1 billion rupees. An offer to buyout other shareholders is also due.

"While CLC's operations are in line with LOLC's core business, Fitch is of the view that t

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