JKH completes phase one of private placement with ADB to secure US$ 50mn

John Keells Holdings PLC (JKH) has concluded phase one of the private placement with Asian Development Bank (ADB) upon the conclusion of the allotment of 65.04 million new ordinary shares (initial placement shares ) at Rs.154.50 per a share to secure an investment of US$ 50 million from the development lender.

In a stock market filing yesterday, JKH announced that phase one of the private placement was completed on 19th of this month, resulting in a post-dilution of 4.7 percent.

The number of initial placement shares that was subscribed for by ADB had been arrived at by dividing the LKR equivalent of US$ 50 million by the issue price of Rs.154.50 per share,  subject to the maximum threshold of 122,500,000 shares to be issued to ADB through the two-phased transaction. 

As the official exchange rate of LKR remained at the same levels when the private placement was announced, the number of initial placement shares issued to ADB didn’t reach the maximum cap of 76.05 million.

Under phase two, JKH has issued 39.02 million non-tradable/non-transferable options, which would entitle ADB to subscribe for additional new ordinary shares of the company (option shares) for an investment amount of up to the LKR equivalent of US$ 30 million.

Accordingly, JKH now expects that the maximum number of ordinary shares that would potentially be issued under the entire transaction, assuming all option shares are subscribed for, to be 104.06 million shares, thereby capping the post-dilution on the conclusion of both phases to a maximum of 7.31 percent, instead of 8.4 percent due to stability in the official rupee exchange rate.

The proceeds of the private placement are expected to be utilised to fulfil investment plans for the Keells supermarket chain, where JKH plans to open around 75 new outlets by FY2023/24, reaching 200 outlets, and setting up of state-of-the-art distribution logistics centres.

The equity investment is to be accompanied with technical assistance funded by the Canadian Climate Fund for the Private Sector in Asia (CFPS) to train 2,000 fruit and vegetable farmers in climate resilience and organic farming, both critical priorities for the country’s agriculture. The investment will strengthen value chain linkages for farmers supplying to markets and enhance food security and safety for consumers.