CB Chief details new investor negotiations

Central Bank Governor Dr. Indrajit Coomaraswamy yesterday, without disclosing names, said that there was a potential investor for ETI and negotiations have been ongoing.

“They initially reached a figure of $ 60 million to buy all nine subsidiaries which will leave only EFIF, and now that offer has gone up to $ 75 million net. While there is $ 75 million of fresh infusion of capital, one also has to take into account that the same party has given a loan of Rs. 400 million ($ 2.6 million) as liquidity support to ETFI and they are writing off that loan. In addition, they are going to take over SFSP, which has a negative net worth of Rs. 1.2 billion ($ 8 million). All together there is about $ 85 million worth of infusion in total,” he added.

Refraining from revealing the name of the company as the owners were negotiating with the investor, Dr.Coomaraswamy said: “It is a locally incorporated company. It is up to the owners to negotiate with the investors. Our responsibility is make sure the valuation of the assets of the company is sufficiently high to be fair by the depositors.”

For the last four to five months the potential investor has kept the company going by infusing Rs. 400 million and he has completed a due diligence. Therefore now the Monetary Board has to take a call on this $ 75 million fresh infusion, which he said the Monetary Board would make a decision on in a couple of days at the next meeting.

On top of that, he said the Central Bank was negotiating with a bank to have a safety net of a guaranteed standby credit line of about Rs. 5 billion as well. “It will be a loan to the company.”

Asserting that the Central Bank was doing the due diligence, he said there were two factors that are important, which is proof of funds and the fact that money must come from bank to bank. 

“Those are the two conditions we have,” he said.

“Other companies that are facing problems are not as asset-rich as this company. That is why we are having such difficulties in getting investors into some of the other companies. Here there is an investor who is willing to pay a fairly reasonable price.”