CSF unlike other finance companies have diverse interest in the financial sector of the country with deep routed branch network, large land bank, flagship stock brokering company Ceylinco Stock Brokers and number of other property and financial services sector subsidiaries.
Proposed Rights Issue & Placement.
As per the Announcement dated 16th December 2010 issued by CSF, it is proposing to issue additional shares on the following basis.
a) To issue of 59,958,150 shares by way rights to the existing shareholders at a price of Rs 5/= per share. Existing issued capital of the company is 39,972,110 shares.
b) To issue 100,000,000 shares by way of a placement to a consortium of investor at a price of Rs 5/= per share.
Above rights issue and placement is however is subject to the approval of the shareholders (exceeding 75% available to votes) at the Extra Ordinary General meeting to be held on the 9th March 2011, 10.00am at Sasakawa Hall, 4, 22nd Lane Colombo 3.
Implications of the Rights issue and the Placement
As a result of the proposed rights issue the ownership of CSF would be taken over by consortium of new investors immediately upon the approval of the private placement by the shareholders. This is as a result of exiting shareholders ownership after the right issue being limited to 99,930,260 shares as against the 100,000,000 shares issued to the consortium. The private placement will effectively enable the consortium the majority ownership in excess of 50%.
Offers made to CSF
During last 3 months there have been many investors who had looked at investing in Nation Lanka Finance PLC (CSF) but the serious offers only came from the current consortium of small investors led by Asanga Seneviratne and other from the well-known business conglomerate Lankem Ceylon PLC. Although the offer of Rs 550mn made by Lankem Ceylon PLC exceeded the value of the other offers, it has not been considered due to unknown reasons.
The Asian Finance Limited one of the subsidiaries of CSF was taken over by the Malaysian investor Tiong King Sing in November 2010
How much CSF worth?
Although the CSF’s Net Asset Value (NAV) and Earnings Per Share (EPS) shows a negative figure many believe that company has potential for a quick turnaround in to profitability. This is in consideration of the current rejuvenation of the economy which has resulted in low cost of funds, appreciation of the real estate assets and the direct and indirect benefits the CSF Group could derive from the stock market activities carried out by its flagship stock brokering subsidiary Ceylinco Stock Brokers (pvt) Limited.
Accordingly many believe that the sale of the controlling interest at Rs 5/= per share (or Rs 500mn) is far below the real value of the company. This is clearly manifested by the current market price which is in excess of Rs 20/= per share both prior to and after the announcement.
Best Opportunity for the Existing Shareholders
The Extra Ordinary General meeting to be held on 9th March 2011 presents a Golden Opportunity to the existing shareholders to enhance the value of their shareholdings.
This opportunity could be derived only if the shareholders are capable of preventing the ownership of the CSF being given over to a new investor in a silver platter for a mere Rs 500mn. Shareholders vote at the Extra Ordinary General meeting of the company would be very crucial.
The decision of the exiting shareholders to Approve the Rights Issue and Reject the Placement will enable the exiting shareholders to enhance the value of its rights whilst it will enable the company to raise Rs 300mn, which would adequately help the company to turn its business around.
Last edited by Quibit on Sat Mar 05, 2011 8:31 am; edited 5 times in total (Reason for editing : typo)