Commercial Credit’s Rs. 500 m Debenture Issue opens today

Commercial Credit and Finance much-awaited issue of 2,500,000 five-year debentures of Rs. 100, each opens today, 23 January 2013, with an option to issue a further 2,500,000 debentures in the event of an over subscription amounting to a total value of Rs. 500 Million. The minimum subscription is Rs. 10,000 or 100 debentures. These five-year unsecured, subordinated, redeemable debentures will be listed on the second board of the Colombo Stock Exchange with 20% interest payable on a quarterly basis.

These debentures will yield an annual effective rate of 21.55%. With the recent amendments to the taxation regulations, interest income on these debentures will be exempt from income tax. Consequently no withholding tax is deductible.

Bankers of the issue will be Hatton National Bank while, the manager and registrars to the issue is Merchant Bank of Sri Lanka.

The trustee to the issue is Deutsche Bank AG, Colombo Branch. RAM Ratings Lanka has assigned a long term rating of BB to these debentures.

The Issue closes on Wednesday 13 February or whichever earlier date on which the initial 2,500,000 debentures or the entire 5,000,000 are fully subscribed.

Commercial Credit and Finance CEO Roshan Egodage said, “We are proud to be recognised as a responsible corporate citizen in the financial services industry. While capitalising on available market opportunities, we also go beyond a mere commercial purpose and stand committed to strive for the greater good of our stakeholders.

“Our operations in general and microfinance activities in particular, embody our commitment and demonstrate the positive impact we have made to uplift the lives of people. This debenture issue affords the larger public of Sri Lanka the unique opportunity to be a part of our continuing endeavours to reach out to more people and thus enhance the quality of their lives.” While meeting the funding requirements in order to implement the future strategies outlined in Commercial Credit and Finance three year plan, the debentures also present attractive opportunities to investors.  Among them is the ability to use the debentures as collateral and the possibility of realising capital gains on disposal. They could also be traded in the debt market through the CSE.