ACME minority shareholders say Lankem failed to pay for mandatory offer shares

By Nishel Fernando

Lankem Ceylon PLC, the majority shareholder of ACME Printing & Packaging PLC (ACME), has failed to settle the payments to a number of minority shareholders of ACME, who had subscribed to Lankem’s mandatory offer late last year, Mirror Business learns.
Although the ACME shares held by the subscribers to the mandatory offer have already been transferred from their respective CDS accounts to a suspense account, Lankem has so far failed to make the payments to them with the payment deadline already surpassing.
Colvis Company Ltd, the single largest shareholder of ACME prior to the mandatory offer, with a 26.86 percent stake, is among the subscribers who are yet to receive payment, which is estimated around Rs.135 million.
On November 25, 2021, following a successful response to their mandatory offer received from the existing shareholders of ACME, registrar to the offer P W Corporate Secretarial (Pvt.) Limited in a stock filing announced that Lankem Ceylon PLC and related parties have increased their ownership stake in ACME by 53.30 percent to 88.27 percent, paving the way for Lankem to become the controlling shareholder of the company. 

Since then, the shares of these minority shareholders had been counted under Lankem’s holdings in market disclosures, allowing Lankem to move ahead with its plans.
In particular, three resolutions were passed to appoint three directors over the age of 70 to ACME unanimously at the Extraordinary General Meeting of the company held on the 12th of last month, where these minority shareholders were not even invited.
Meanwhile, ACME also announced plans for a rights issue of 123,485,739 shares, in a way of three new ordinary shares for every  one existing ordinary share of the company, which is yet to be informed to these minority shareholders. The market insiders cautioned that Lankem’s failure to honour the terms of the mandatory offer and absence of a proper monitoring mechanism of the Colombo Stock Exchange (CSE) could impede the confidence and hurt the market sentiment  at a time when the CSE  has been moving on an upward trajectory.
Meanwhile, several parties have already approached the Securities Exchange Commission (SEC) to complain on the non-payment by Lankem’s Holdings.
Experts also cautioned that such practices could further discourage foreign investments to the country in particular, given Colvis Company Ltd’s role as a long-term foreign investor in the country over the past four decades, with its investments in multiple sectors as well as its parent entity being a leading multinational firm.
“If the company has to seek the legal actions to recover its funds, it could really leave a bad precedent,” a stock market stakeholder said.
Attempts to contact Lankem officials to comment on the matter failed.