Softlogic to raise up to Rs.10bn via equity infusion

Debt-ridden Softlogic Holdings PLC (SHL) is seeking to raise up to Rs.10 billion via equity infusion, over the next one-year period. 
The purpose of the proposed plan is to settle the mounting debt of the company while meeting the working capital requirements.
According to a stock filing by Softlogic, the proposed equity infusion plan consists of three components, which include Rs.2.98 billion via a rights issue, Rs.1.87 billion by issuing warrants attached to the proposed rights and Rs.5.1 billion, which is to be decided by the board, upon the completion of the first two components. The stated capital of the company stood at Rs.12.2 billion.
In terms of the proposed rights issue, Softlogic plans to issue one share for every four held, up to 298,135,803 shares, at Rs.10 each.
The company also plans to issue up to 178,881,481 warrants, in the ratio of three warrants for every five rights shares subscribed, exercisable on December 31, 2024, at an exercise price of Rs.10.50.

Although the proposed Rs.2.98 billion rights issue wouldn’t be underwritten, the company shared that the two top shareholders of the company have indicated that they would subscribe to their entire entitlement of rights, together with the exercise of warrants.
Softlogic Chairman and Managing Director Ashok Pathirage owns a 41.35 percent stake and Samena Ceylon Holdings Ltd owns a 21 percent stake in the company.
Meanwhile, the board of directors has decided to revert with a mechanism to raise the remaining Rs.5.14 billion in due course, in consultation with the relevant parties and regulatory authorities, subject to obtaining the regulatory approvals as applicable. If it is a rights issue, the company noted that the two major shareholders have also indicated that they would also subscribe for their full entitlement in the process of raising the remaining equity infusion of up to Rs.5.14 billion.
As of September 30, 2023, SHL Group retained losses amounting to Rs.59 billion, up from Rs.34 billion a year ago. The group’s short-term interest-bearing borrowings amounted to Rs.16 billion and Rs.46 billion in the long term. The other current liabilities amounted to Rs.53 billion.
Total equity as at September 30, 2023 was a negative Rs.20.7 billion, up from Rs.3.8 billion a year ago and Rs.13 billion as at March 31, 2023.
As at September 30, 2023, SHL Group retained losses amounting to Rs.59 billion, as against Rs.34 billion a year ago and Rs.49 billion as at March 31, 2023. SHL Group’s short-term interest-bearing borrowings amounted to Rs.16 billion and Rs.46 billion in the long term. The other current liabilities amounted to Rs.53 billion.
Trading of the shares of the company has been suspended with effect from December 8, 2023, due to non-submission of the annual report for the year ended on March 31, 2023. 
(NF)