Swiss-based firm to invest Rs.84mn in Tess Agro via private placement

Swiss-based IPEK S A Switzerland has expressed interest to infuse Rs.84 million into Tess Agro PLC via a private placement, subscribing to 168 million new voting shares of the company and consequently becoming the largest shareholder of the firm, subject to necessary regulatory and
shareholder approvals.

“We are pleased to inform you that M/S IPEK S A Switzerland, which is a diversified group of companies involved in oil trading, engineering and waste recycling, has expressed interest to make an investment via a private placement to the company, thereby to enter the food industry,” Tess Agro announced in a stock filing to the Colombo Stock Exchange (CSE) this week.

Tess Agro plans to issue 168,000,000 voting shares to IPEK S A, at 50 cents each, in order to secure Rs.84 million investment via a private placement. 

Upon the completion of the proposed private placement, IPEK S A is set to become the largest shareholder of the company, with a 33.08 percent stake, followed by Tess Private Limited, with a 20.8 percent stake. 

As of June 30, 2021, Tess Private Limited was the largest shareholder of the company, with a 31.13 percent stake, followed by S.A. Fernando, with a 7.2 percent stake. The public shareholding of the firm was 41 percent. 

The proposed private placement is subject to  obtaining a waiver from the Securities and Exchange Commission (SEC) and relevant approvals from the CSE as well as the approval of the company’s  shareholders at an Extraordinary General Meeting.  

In early 2020, the company secured the approval from the shareholders to pursue a strategic investor to fund an export-oriented tin can manufacturing project.

IPEK S A, a relatively young company, currently operates in eight countries and has interest in oil production and sales, petroleum products, construction, finance, ecology, logistics, polymer production, industrial waste, refineries equipment, alternative oil production. It is currently exploring further avenues for diversification.

Tess Agro’s current stated capital stands at  Rs.407.80 million represented by 339,797,287 voting shares and 50,000,000 non-voting shares. 

The company’s revenue marginally recovered to Rs.8.4 million in the financial year ended on March 31, 2021, from Rs.6.2 million recorded in the previous year. However, it was well below the Rs.189.5 million revenue recorded in the 2018/2019 financial year, as the company suspended exports while taking a blow to its operations from the Easter Sunday attacks.

“The company suspended its exports this year and concentrated on building its warehouse in Kerawalapiya, with a view to improve its revenue streams. The Easter bombings at the beginning of the financial year 2019/20 plummeted Sri Lanka to an economic and investment negative outlook, significantly affecting the company’s drive to attract investment, which remained a challenge until now. In addition, the COVID-19 pandemic caused further difficulties in operational activates. However, we are confident that the strong resilience of the company will continue to overcome these challenges and proceed towards securing the much-needed capital infusion in the period to come,” Tess Agro Chairperson S. Failka Fernando stated.