Blue Diamonds and Daya Senanayake are forever!

• Co-founder agrees for Rs. 12 m settlement after dropping all litigations of Rs. 2 b

• Appointed Chairman Emeritus of Blue Diamonds Jewellery Worldwide in hands-off and honorary capacity

The long-drawn legal battle between Blue Diamonds Jewellery Worldwide Plc (BDJW) and its co-founder Daya Senanayake has been amicably settled, it was announced yesterday.

BDJW and its former Deputy Chairman and Managing Director Senanayake have entered into an agreement for the settlement and the withdrawal of all litigation between the parties.

In the event of the withdrawal of the litigation not being permissible or possible for any reason whatsoever, Senanayake has nevertheless undertaken and has warranted that he has waived all rights in terms of the litigation and shall not claim any damages or costs of litigation that may be awarded to him by any Court against BDJW or apply for any writ of execution in pursuance thereof against BDJW.

Senanayake has agreed with BDJW that all contingent liabilities of BDJWL in respect of all litigation between the parties amounting to over Rs. 2 billion and the interest thereon will be extinguished and that BDJW shall not be called upon to pay any sums of money whatsoever to Senanayake in respect of the cases between the parties. He has further confirmed that he has no claims against of the current directors of BDJW.

The company has agreed to pay a sum of Rs. 12 million to Senanayake in consideration of the settlement and all allegations made by BDJW against Senanayake have been withdrawn pursuant to the settlement.

Senanayake has been appointed Chairman Emeritus of BDJW by the Board of Directors and this position does not involve any representation on the Board or any financial commitment on part of the BDJW.

Senanayake co-founded the BDJW with Ceylinco Consolidated Chairman Lalith Kotelawala. Despite the breakthrough announcement, stock price of BDJW didn’t gain but closed 40 cents down to Rs. 4.40.

In the just-concluded FY12, BDJW posted a profit of Rs. 22 million, as against a loss of Rs. 14.2 million. Though turnover rose by 33% to Rs. 73 million, the profit was aided by Rs. 43 million contribution of creditors not payable written back.

As at 31 March 31, 2012, accumulated losses were Rs. 880 million.

ECL Soft holds a 11% stake in BDJW whilst Sri Lanka Insurance Corporation holds 10.5%.