The core company of Sri Lanka’s well known family controlled entity,
EAP Edirisinghe Group is presently facing a severe strain in its capital
adequacy ratio (CAR) and hence undergoing a major restructuring
exercise, The Nation Gain learns. The banking and finance company
regulator, Central Bank of Sri Lanka has requested ETI Finance Limited,
the finance unit of the group to inject capital and also set an
ultimatum to comply with all regulatory directions by mid-2014.
to informed sources, ETI expects to bring in external shareholder funds
in the near term in order to improve its financial position.
Meanwhile, Fitch Ratings Lanka which last week, downgraded ETI
Finance Limited’s (ETI) National Long-Term rating to ‘CC(lka)’ from
‘BB-(lka)’ cautioned that if new capital injection did not transpire and
in the absence of further shareholder injections, ETI will have to rely
on the expedient disposal of its investments in group companies and
other non-earning assets to improve the company’s credit profile.
inability to improve its financial position in the near-term may result
in a further downgrading” Fitch stated in the report.
The rating agency said the downgrade follows the restructuring of
ETI’s operations and the subsequent restatement of its financial
accounts for the year ended March 2012 which showed capital adequacy
ratios (CAR) and liquid assets below their respective minimum regulatory
‘The regulator is currently overseeing the restructuring of ETI’s
operations, which includes the possible sale of group investments and
other non-earning assets to improve regulatory liquidity, CAR, and
profitability. Pursuant to the regulatory direction and as part of the
restructuring process, ETI’s majority shareholders have transferred the
ownership of Swarnamahal Financial Services PLC, to ETI’, Fitch said in
it’s rating rationale.
On February 6, the Colombo Stock Exchange was informed that five
major shareholders of Swarmahal Financial Services Plc (total
shareholding of the EAP family) had transferred their shareholding to
ETI Finance Ltd. Accordingly, Jeevaka Hemal Edirisinghe, Anjali Deepa
Edirisinghe, Nalaka Premal Edirisinghe, Asanka Srimal Edirisinghe and
Dr. Soma Edirisinghe had transferred 82,000,020 shares each to the
ailing finance firm.
Meanwhile, attempts by The Nation to obtain a comment from ETI Chairman or other senior officials in the group proved futile.