Dunamis Capital goes for second debenture issue

By Shehana Dain

Dunamis Capital PLC will raise Rs. 1 billion afresh via its second debenture issue commencing on 19 November.

The previous exercise was in August 2014 where the company raised Rs. 1 billion.

The company is issuing rated, senior, unsecured, redeemable debentures on the basis of initial issue of 10 million debentures of Rs. 100 each.

The issue is slated to close on 9 December or such earlier date on which the maximum of 10 million debentures are fully subscribed; or the directors may, at their discretion, decide to close the subscription list prior to the debentures being fully subscribed.

The issue has two types of debentures type A is a five year tenor and carries 10.50 % interest rate per annum payable semi annually with an Annual Effective Rate (AER) of 10.78%. Type B is five years and carries six month net t-bill rate plus 2.50% interest rate per annum payable semi annually and AER is not applicable.

With respect to type B rated debentures, the six-month treasury bill rate published by the Central Bank of Sri Lanka at an auction held immediately prior to the first date of each interest period in respect of each subsequent interest period will be considered, provided however that such rate of interest shall not exceed 12 % per annum and shall not be less than 9% per annum.

The debt security has been rated [SL] BBB+ and the issuer has a Rating of [SL] BBB+; with Stable Outlook by ICRA Lanka Ltd.

Dunamis Capital proposes to utilise the proceeds of Rs.500 million to settle short term commercial paper and loans currently of tenure less than three months and costing approximately 9%. Moreover from this Rs. 150 million will be employed to pay a money market loan obtained by a leading commercial bank by 31 January 2016.

The additional Rs. 500 million will be invested in listed and unlisted equities within a period of one year. In an In the event of a delay, the company wishes to invest the funds raised through the debenture issue in Government securities which are risk free until the immediate utilisation upon receipt of the same.

Dunamis Capital’s group non-current liabilities stood at Rs. 2.51 billion of which Rs. 1.8 billion are debentures. Moreover current liabilities were Rs. 14.65 billion in which Rs. 9 billion comprises securities sold under re-purchase agreements and interest bearing borrowings stood at Rs. 3.8 billion up from Rs. 2.5 billion in the corresponding period of 2014. 

Additionally Dunamis Capital at Group level recorded bank overdrafts of Rs. 254 million up from Rs. 154 million in the previous year. Furthermore the Group recorded total assets worth Rs. 19.16 billion in which financial assets held for trading amounted to Rs. 10.82 billion in the quarter ended 30 June 2015.

Dunamis Capital recorded a consolidated profit after tax of Rs. 215 million for the quarter ended 30 June 2015 compared to Rs. 136 million recorded in the corresponding period of 2014. During the quarter the financial services arm of the group First Capital recorded a profit after tax of Rs. 176 million compared to Rs. 218 million in the prior year. The real estate unit in Kelsey recorded a consolidated loss of Rs. 28.5 million for the quarter compared to a profit of Rs. 3.6 million in 2014.