An Indian investor is reportedly eyeing to acquire the controlling stake of stock market-listed IT company, PC House PLC (PCH).
"PC House recently announced a rights issue and market analysts note that Indian construction company will buy and subscribe to the majority of the rights triggering the Takeovers and Mergers code of CSE," a source familiar with the deal told Ceylon FT.
PC House on 14 March 2013 in a filing to CSE said that on 13 March 2013 the company's board agreed to offer 114,466,667 voting shares by the way of a rights issue to the existing shareholders on the ratio of one ordinary voting right valued at Rs 3 per share to every two voting shares held by the shareholders. Rights trading will commence at the CSE on 29 April and the last date for Renunciation is on 7 May 2013.Currently PCH has 228,933,334 voting shares representing over Rs 801.26 million stated capital. With the rights Issue the Company will further raise over Rs 343.4 million to meet the working capital requirements.
“It is anticipated that the new investor will buy a majority of rights which inturn is nearly 30% stake of the company and later from a Mandatory Offer it would be further increased by another 30% totalling to a 60% stake of PCH,” sources told.
Meanwhile, however when asked whether there is an offer by an investor for 60% stake of PCH, company Chairman S.H.M. Rishan said he will call back to give the details since there is no such announcement made to CSE.
“I can only talk about things that are announced to CSE. I will be in a position to give details only once it is announced,” Rishan added.
Back in August 2010, PC House PLC, which was said to be the first emerging IT conglomerate that was to be listed in Colombo Bourse raised Rs 630 million issuing 57.2 million voting shares at Rs 11 each. At the time it was stated that the funds collected will be utilized to expand internet data centre operations and outsourcing, finance the enhancement of BPO and KPO operations, retire some of the expensive debt capital to increase leverage capacity, expand current branch network of 28 with five additional branches and improve service quality and to streamline working capital operations.
In July 2010 the company also appointed new directors, Mangala Boyagoda, Sarath Wickramanayake, Modarage Thakshila, Shanthikumar Nadarajah and Kuvera de Zoysa although later Shanthikumar Nadarajah resigned from the board after two years on 16 August 2012 whilst Sarath Wickramanayake resigned from the board on 24 August 2012.
Further Mangala Boyagoda, Modarage Thakshila and Kuvera de Zoysa resigned from the board on 31 August 2012 whilst PC House Chairman S.H.M. Rishan’s wife Sithy Shamila Rishan tendered her resignation on 17 December 2012 according CSE Disclosures by PC House.
Meanwhile latest quarter results of the company as at 31 December 2012 outlines that PCH Group revenue had come down from Rs 2.95 billion year ago to Rs 1.69 billion (down 43%) for a nine months period and net profit had fallen from Rs 158.8 million to Rs 5.6 million (down 96%) and Earnings Per Share had fallen from 69 cents to two cents for the same corresponding period.
PCH Chairman Rishan as at December 2012 holds nearly a 48.78% of the company with over 111.67 million shares and his wife holds another 6.03% with a 13.8 million shares and PC House mother company, related subsidiaries and associates including PCH House Holdings, PC Pharma, Orient Garments collectively own another 12% of the company.