Battaramulla workshop to be made state-of-the-art
Colonial Motors PLC has through its wholly owned subsidiary, Colonial Motors (Ceylon) Limited, has invested Rs.142 million purchasing Ceylinco Hire Drive through the Supreme Court and the parent company is investing a sum of Rs.135 million against this purchase in the form of equity.
This information has been communicated to shareholders of listed Colonial Motors PLC, now engaged in a zero cost capital raising exercise through a rights issue.
Colonial Motors PLC, a member of the Colombo Fort Lands/E.B. Creasy Group, is floating the rights issue of 1.52 million ordinary shares comprised at Rs.130 per share to holders of 9.12 million ordinary shares of the company at the end of trading on December 14, 2012.
The rights issue is in the proportion of one new ordinary share for every six existing shares and the board has resolved that in its opinion the Rs.130 price per share "is fair and reasonable to the company and all its shareholders."
Colonial Motors was incorporated over a century ago and was listed on the CSE on January 1970. The company’s principle activity is the sale of motor vehicles and spare parts and providing vehicle maintenance.
Colonials are also owners of a very valuable portfolio of equities listed on the Colombo Stock Exchange.
The subsidiary is an authorized distributor for Mazda vehicles in Sri Lanka and Maldives and part of the rights issue cash is to be utilized in modernizing the Battaramulla workshop purchased from Ceylinco Hire Drive.
The balance Rs.62.69 million will be used as working capital requirement of the company. Shareholders have been told that it is intended to refurbish the workshop and making it an up to date fully equipped, state-of-the-art workshop within a year.
The directors of Colonial Motors (Ceylon) Limited (the subsidiary) comprise Messrs. A.M.de S. Jayaratne, S.D.R. Arudpragasam, J.M. Swaminathan, A. Rajaratnam, S. Rajaratnam, R.M.M.J. Ratnayake and A.R. Peiris.
Shareholders have been further told that the company will be utilizing the working capital raised as and when required and these funds are expected to be exhausted within a year.
There is no underwriting agreement in relation to the rights issue and in the event that the issue is under-subscribed, whatever proceeds raised will be utilized with alternate methods of funding such as bank facilities being sought if the need arises.
The directors have said that they have noted considerable appreciation of the price of the company’s ordinary shares and in order to facilitate greater liquidity of the shares have decided on a sub division after the listing of shares arising from the rights issue.
This would be on the basis of subdividing every seven existing shares into 10 and the sub division, subject to the rights issue be fully subscribed will result in 10.65 million ordinary shares being increased to 15.21 million without affecting any increase in the company’s stated capital.
The directors of Colonial Motors PLC are Messrs. A. Rajaratnam, S.D.R. ARudpragasam, R.M.M.J. Ranayake, J.M. Swaminathan, A.M. de S. Jayaratne, and S. Rajaratnam.