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Sri Lanka's Central Bank to form new holding company for collapsed Ceylinco Golden Key assets.

Colombo, Sept. 30 -- Sri Lanka's Central Bank and the Supreme Court-appointed Watawala Committee along with a depositors union have consented to form a new holding company to hold assets of the collapsed to Golden Key Credit Card Company (GKCCC) of the Ceylinco Consolidated and run it as a viable business venture under an independent management.

"We wrote to President Mahinda Rajapaksa raising grievances of the Golden Key depositors and he has been generous enough to order the Central Bank of Sri Lanka to immediately look into this," Vice President of Golden Key Depositors Committee, Dushanthi Hapugoda told the Asian Tribune.

Not to proceed with the Second Repayment Plan or sale of GK assets.

Shares to be issued in lieu of deposits

"After a meeting with my committee and CBSL Governor Ajith Nivad Cabraal and the Watawala Committee it was decided to stop forthwith the sale of any Golden Key assets. It was also decided to form a new company and issue shares of that company to depositors on pro-rata basis, proportionate to amount of deposit outstanding of each depositor,"

Board of Directors would be constituted by nomination of President and Central Bank which will include members of Committee of Chartered Accountants (CCA) headed by Prof. Lakshman R. Watawala and even depositors, she added.

"We were told that President Rajapaksa had given top priority to this and would immediately look into its progress after his return from New York," Hapugoda claimed.

Hapugoda and her committee are hopeful that with strategic ventures under GK umbrella being run by a good management, the depositors would have a better chance of getting a greater amount of their defaulted investments reimbursed, which would not be feasible if GK assets were sold.

"For instance, although valued at a meager Rs. 500mn, we observed that Golden Key Hospital is worth over Rs. 4bn. It is grossly undervalued. Furthermore during a recent visit there we saw that there is much potential to convert it into a general hospital. In such a scenario depositors would have the option of selling shares or holding on to them for realization later on,"

Earlier the CBSL obtained approval of Supreme Court to pay 75 percent of the deposit outstanding or Rs. 200,000 whichever is lower after deducting the first phase payment. While Rs. 770 mn was needed for the second phase, CCA hoped to raise funds by disposing GK assets such as the Golden Key Eye Hospital, Ceylinco House, Sea Sands Hotel etc.

On August 6, the Supreme Court approved the sale of the Golden Key Eye Hospital provided that the Singaporean buyer- Ho Soo Fong gave a bank guarantee of US $ 100,000 by August 16 and paid the full amount of US$ 12.1739 mn into the Golden Key dedicated account, by August 20. Fong was to be issued 500,000 shares of GK, at Rs. 10 each.

However GK's creditors- DFCC Bank and Peoples' Leasing were to be paid Rs. 96.4mn and Rs. 43.4mn respectively, while Central Finance was to be paid the capital sum after being calculated by CCA, Golden Key Depositors Society President Anusha Emmert said.

According to the some sources, although Golden Key Group had an asset base of Rs.13bn at the time of its collapse, it had dwindled to a mere Rs.2bn, now as interested parties had transferred assets without the Central Bank being aware of it. However with the issuance of shares, the depositors now have the relief of not having GK assets sold under their right value, some quarters believe.

Meanwhile Golden Key Company's former sister firm and ex-Ceylinco entity- The Finance Company (TFC) has been given green light by Central Bank to allow nearly ten percent of its existing deposits to be converted into 100 million non-voting shares of Rs. 20 each, converting nearly Rs. two bn of deposits into equity.

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Publication:Asian Tribune (India)
Date:Sep 30, 2010
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