Consortium makes Rs5.5bn bid for Sri Lanka’s Ceylinco Insurance stock in Trust
COLOMBO (EconomyNext) – A consortium of domestic and foreign investors have made a bid in excess of 5.5 billion rupees for 3.5 million Ceylinco Insurance shares held in a trust which is expected to be dissolved under stock exchange rules, sources familiar with the matter said.
The Ceylinco Insurance Employee Share Ownership Trust (CIESOT) holds 4.57 million shares or a 22.8 percent stake in the insurer.
The consortium has made a bid of around 1,600 rupees per share for 3.57 million shares valuing it around 5.5 billion rupees, sources said. It leaves one million shares or 5 percent of the company to be distributed to workers in kind, sources said.
It was not immediately clear whether the trust would reject or consider the offer.
Ajith Gunawardena, head of Ceylinco’s general insurance unit and a trustee said, all decisions would be taken according to the trust deed, without elaborating. Any dissolution of the trust would also take place according to the trust deed, he said.
Under Sri Lanka’s existing listing rules permanent share trusts for employees are no longer permitted for companies in the Colombo Stock Exchange and new share ownership plans are limited to 5 percent of the total equity at any time.
All legacy plans and trusts have to be dissolved and distributed to the beneficial owners under an allotment plan and any balance sold on the stock exchange and the cash proceeds also distributed.
Several listed companies that had share trusts dissolved them last year, ahead of the deadline, while CIESOT was embroiled in a court battle.
Sri Lanka’s Securities and Exchange Commission declined to comment on any decision they may make on the matter.
The shares of Ceylinco Insurance has drawn investor interest following the collapse of the Ceylinco group, with investors trying to gain control.
Global Rubber Industries (Pvt) Ltd, which holds 22.25 percent of stock and connected shareholders, who do not have board seats, have also gone to court.
Sri Lanka’s Supreme Court in a decision this year determined that CIESOT was a share ownership trust where workers were the beneficial owners, thwarting an attempt by depositors of the collapsed Golden Key Credit Card Company to use the shares to make good the losses.