HNB re-files CSE notification on EGM cancelation after objections

Hatton National Bank (HNB) yesterday re-filed a notice in the stock market changing their initial statement that the Extraordinary General Meeting (EGM), which was originally to be held today, was “adjourned” and changed it to “will not be held” at the behest of Stassen Exports.  

Last Thursday the Commercial High Court issued two Interim Orders to HNB and its key shareholders preventing them from holding an EGM, which was scheduled for 26 October, until a court decision was made on the bank proceeding with a share issuance of $ 50 million to the Asian Development Bank (ADB). 

In response HNB, in a filing to the Colombo Stock Exchange (CSE) on Monday, notified shareholders that the EGM had been “adjourned”. 

This provoked a tough response from the lawyers of Stassen Exports on Tuesday who insisted HNB was in danger of contempt of court for using the term “adjourned” as it would only be applied if a meeting had already commenced. 

“You ought to be aware that such a meeting cannot be adjourned by you, as an adjourned meeting is a continuation of a meeting that has already commenced. You are again reminded that neither you nor the Board of Directors has any right to commence or hold or proceed with the subject meeting in view of the interim orders,” Attorney-at-law Upendra Gunasekara said in the letter seen by the Daily FT. 

“I have been instructed to notify you….to take immediate steps to rectify the invalid disclosure by way of a further disclosure to the effect that the meeting will not be held in view of the interim orders issued by court,” it added.     

The HNB board in September approved the issuance of shares for $ 50 million to ADB by way of a private placement, making the development lender a strategic investor. However, the move had to be approved by shareholders at an EGM before being implemented.  

“The proceeds of the issue of shares by private placement as aforementioned will be utilised for the purpose of strengthening the capital base/balance sheet of the bank and supporting the overall business growth of the bank,” the bank said in a stock exchange filing at the time.

The private placement of up to 9.9% of the shareholding is subject to shareholder and regulatory approval. The shares will be offered at the average price at which the shares were traded during the 30-market-day period preceding the date of the EGM at Rs. 220 if the average price is more than Rs. 220, and Rs. 190 if the average price is less than Rs. 190.

In March, HNB entered into an agreement with ADB to raise $ 100 million by way of a seven-year senior debt, HNB said in a press release. It was earmarked as the largest transaction of ADB with a local bank and the funds raised were to have been deployed towards infrastructure development projects, with special emphasis on renewable energy, power and irrigation.  

HNB debenture issue oversubscribed, Rs. 6 b raised 

Hatton National Bank (HNB) yesterday said its listed debenture issue was oversubscribed during the early hours of the opening day, raising Rs. 6 billion.

The debenture issue of HNB was for Rs. 5 billion with a green-shoe option to go up to Rs. 6 billion and was rated A+ (lka) by Fitch Ratings Lanka Ltd, a statement said.

The five-year debentures have an interest rate of 11.75% payable annually and the seven-year debentures carry an interest rate of 13% also payable annually.

NDB Investment Bank acted as the Lead Managers to the issue of 60 million debentures at a par value of Rs. 100 each while Acuity Partners acted as the Co-Managers.