Commercial Credit goes for Rs. 500 m debenture

Commercial Credit PLC, incorporated in October 1982 and registered under the Monetary Board of Central Bank of Sri Lanka under the Finance Companies Act No. 78 of 1988 and registered under the Finance Business Act No. 42 of 2011, intends to raise a sum of Rs. 250 million through its listed debenture issue. The issue will be open in early January 2013.

The company provides financial solutions in the areas of microfinance, leasing, hire purchase, short term loans, pawn broking etc.

Managers and registrars to the issue is the Merchant Bank of Sri Lanka PLC’s Corporate Advisory and Capital Markets Division. Merchant Bank of Sri Lanka, incorporated in March 1982, is the pioneer investment/merchant Bank in Sri Lanka and was quoted on the Colombo Stock Exchange in 1991.

The bank’s largest shareholder is the Bank of Ceylon which holds a strategic stake of 72% and in 2005 entered a strategic alliance with SBI Capital Markets Limited, which is the largest investment bank in India.

The money raised from this issue will be utilised to comply with the regulations of the Central Bank of Sri Lanka by improving the Tier 2 ratio and to improve the fund inflow and thereby undertake the strategic developments.

The issue comes with an option to increase the sum up to Rs. 500 million in the event of an over subscription by issuing unsecured subordinated redeemable debentures. Each has a face value of Rs. 100.

The instrument has been rated a long term rating of BB by RAM Ratings, providing an opportunity to the investors to invest their money in fixed and floating rate debentures varying from 3-5 year maturity period to get an attractive rate of over 17%, annual effective rate (AER).

The company announced unaudited earnings results for the six months ended 30 September 2012. For the six months, the company reported a net interest income of Rs. 1.16 billion against Rs. 723.2 million a year ago. Net profit was Rs. 270.3 million or Rs. 2.48 per basic annualised earnings per share against Rs. 265.5 million or Rs. 2.44 per basic annualised earnings per share a year ago.

During 2012, the company had optimised the country’s economic benefits and increased its total assets value up to Rs. 12.02 billion (as at 30 September 2012, unaudited), a growth of 39% compared to 2011’s value of Rs. 7.37 billion (as at 30 September 2011) .