Nations Lanka Finance to raise Rs. 800 m

* Rights Issue to net Rs. 300 m with Rs. 5 per share

* Private placement to draw Rs. 500 m at same price per share to three parties Investor Access Equities, Nawaloka Construction and J. Rudra

Loss making Nations Lanka Finance Plc is planning to raise Rs. 800 million by issuing new shares via a rights and a private placement to fund its business.

The basis of the fund raiser was resolved by the Board of Nation Lanka Finance on Wednesday subject to shareholder and regulatory approval.  

Rights Issue will be on the basis of three new shares for every two held at Rs. 5 each. This will involve issuance of 59.958 million shares raising Rs. 299.79 million.

The private placement will entail issuing 100 million shares at the same rights price of Rs. 5 each though those identified to participate in the private placement will not get rights.

The Rs. 500 million worth private placement is proposed to be made to Investor Access Equities Ltd., (70 million shares worth Rs. 350 million); Jayaprakash Rudra (16 million shares worth Rs. 80 million) and Nawaloka Construction Company Ltd., (14 million shares worth Rs. 70 million). Nation Lanka, formerly Ceylinco Securities and Financial Services, will be using the funds to be raised for disbursement of credit facilities whilst the move is also part of complying with the directions issued by the Monetary Board.

Given that the shares to be issued under the private placement will exceed 20% the move is also subject to approval from the Securities and Exchange Commission for the waiver of the provisions of the listing rules which have placed certain restrictions.  In 2009/10 financial year the Company concluded an one for one rights issue raising Rs. 240 million to finance working capital. Its current stated capital is Rs. 518.3 million.

In the last financial year Nation Lanka Finance suffered a loss of Rs. 734 million compared to a loss of Rs. 265.8 million in 2008/9 financial year. The total Group assets too declined from the previous year’s Rs. 8.5 billion to Rs. 6.2 billion. In the first half of 2010/11 financial year, the Company’s turnover declined by 25% to Rs. 300.6 million whilst that of the Group dipped by a similar percentage to Rs. 654.7 million.  Net loss attributable to equity holders amounted to 68 million in the first half as against Rs. 401.5 million loss a year earlier.

Assets were down to Rs. 5.8 billion as at September 2010 for the Group from Rs. 8.2 billion a year earlier and Rs. 6.1 billion as at 31 March, 2010. Company figure was Rs. 2.3 billion, down from Rs. 3.5 billion a year earlier and Rs. 2.7 billion in March 2010. Liabilities had been reduced to Rs. 2.5 billion, from Rs. 3.3 billion a year earlier and Rs. 2.8 billion as at March 2010 at Company level and Rs. 6.3 billion for the Group down from Rs. 8.2 billion a year earlier and Rs. 6.6 billion as at March 2010.

Shareholders’ funds were a negative Rs. 679 million at Group level and a negative Rs. 204 million at company level as at 30 September, 2010.