Nation Lanka Finance announces rights issue to raise Rs.502mn

25 February 2016 12:09 pm Views - 954

Nation Lanka Finance (NLF) has announced a rights issue to raise Rs.502 million to support the company’s core capital requirement and ensure its compliance with regulations that have been stipulated by the Central Bank of Sri Lanka (CBSL).

The investment to increase core capital will help improve the company’s overall liquidity whilst supporting its continued operational growth and expansion. The proposed rights issue will be held on the basis of 02:01 at Rs.1 per share, with a total of 502,326,522 ordinary shares being offered to the existing shareholders of the company.

The core capital base of the company in the financial quarter ending September 30, 2015 was recorded at Rs.72 million and given that the rights issue is fully subscribed, the capital base by March 31, 2016 is expected to increase to Rs.747 million with the expected operational profits. (The minimal capital requirement set by the Central Bank of Sri Lanka is Rs.400 million). Commenting on the company’s upcoming rights issue, Nation Lanka Finance CEO Jayantha Perera stated,

“The capital infusion provided by this rights issue will help Nation Lanka Finance to boost its performance in the current financial year and will strengthen the company’s core capital base, whilst ensuring its compliance with the stipulated Tier I capital adequacy ratio set by the CBSL. This issuance will augur well for the company’s continued growth and will enable us to retain our current position of profitability. Our focus on compliance is also part of our long-term strategy to establish Nation Lanka Finance as a reliable, dynamic and leading force in the financial services industry.” Commenting on how the rights issue would be handled in the event of an under subscription, Perera stated, “We are confident that this will not be the case.

However, in the event that the rights issue is not fully subscribed, the company will take the shortfall into consideration and consolidate on profitability to strengthen the core capital base and gradually improve liquidity. This rights issue was recognized as an important part of our expansion and was unanimously approved at the Extraordinary General Meeting (EGM), which was held on February 10, 2016. As we look ahead to the future, Nation Lanka Finance will continue to establish itself as an organisation whose board of directors and management remain completely committed towards ensuring shareholder wealth maximization.”