Muller and Phipps goes for capital reduction

The board of directors of Muller and Phipps (Ceylon) Plc has resolved to restructure the company’s capital by means of reducing its stated capital without effecting any change to the number of issued and fully paid shares.

This reduction will be effected by setting off against the company’s stated capital of Rs. 316.8 million, Rs. 233.8 million constituting a part of the brought forward losses as at April 2009 (total losses as at April 2009 being Rs. 241.7 million) and by writing off a similar amount the Company’s carry forward losses of Rs. 235.5 million as at Financial year ended 31 March, 2010. This will reduce the carry forward losses to Rs. 1.65 billion. Consequent to the proposed capital reduction, the stated capital of Rs. 316.857 million represented by 283 million fully paid shares will be reduced to Rs. 83 million represented by 283 million fully paid shares.

The move is to strengthen Muller and Phipps’ balance sheet and thereby have access to necessary loan finance to support corporate operations as well as to facilitate the company’s ability to effect corporate distributions and otherwise secure financial stability and viability.

The proposed capital reduction is subject to shareholder, regulatory and judiciary approvals. An EGM has been fixed for 18 March, next year for this purpose.