The collapsed Golden Key Credit Card Co. (GK) is getting a fresh capital injection of around Rs. 627 million from the Central Bank by way of a loan to re-start its business, more than four years after it went bust, official sources said.
The CB will lend the money from a Rs. 4.2 billion liquidity facility in a bailout package for the troubled company with the consent of the Supreme Court following its endorsement of the action plan to revive the GK, officials said.
The GK currently has liquid cash amounting to Rs.90 million at the city branch of the Bank of Ceylon, they revealed.
The assets of former Ceylinco Chief Lalith Kotelawala and his, absconding Sicille Kotelawala amounted to Rs. 793.2 million while that of other seven directors, their spouses and children amounted to around Rs. 431.1 million, making it a sum total of Rs. 1.2 billion, according to official estimates. Another Rs 600 million has also being accounted in the estimates on assets.
However this money is not sufficient to restart the company and repay around 6254 depositors, they added.
To revive its business operations, the company needs more capital to replace the capital wiped out by the collapse. It has to settle with its other creditors in addition to the depositors.
The failed company cannot raise new capital and that is why the CB has decided to intervene in the GK revival process, they disclosed.
Chairperson of All GK depositors Association Dushyanthi Hapugoda told the Business Times that the value of the total available assets is only Rs. 1.8 billion and with the decline of the market in land and property as well as the adverse publicity against the GK, these assets cannot be realised at a fair value.
Therefore 100 per cent repayment cannot be expected, she said, adding that action will be taken to pay at least Rs.100,000 to each depositor after the resumption of GK with limited business options.
She disclosed that the company will re-start next month and the organisers are in the process of finding an auspicious time for this purpose.
The action plan revealed that the value of the deposits by depositors after setting off the rebate expenses was approximately Rs. 9.179 billion. According to the plan, depositors will receive 41 per cent of their investments, which will fall to 38 per cent once the Rs. 100,000 payment is made. This 38 per cent due balance wouldn’t, however, be settled in cash but by issuing shares of the company to depositors. After three months these could be traded in the Colombo Stock Exchange, she said.
Funds for the implementation of the action plan would be raises from the sale of assets of the GK group, disposal of some assets of the Ceylinco group and others as per existing orders of the Supreme Court, and generation of money by the public listing /private placements/forming of joint ventures, by certain GK group companies, she added.
Under the plan, the companies to be listed on the stock exchange or where joint ventures would be established would be the Golden Key Eye & ENT hospital which will be converted into a multi- specialty hospital; the project at Kirimandala Mawatha which could be developed into a hospital or city hotel, the teak plantation at Galewela and the GK IT cluster, other officials revealed.