ECONOMYNEXT – Sri Lanka’s Colombo Dockyard Plc said it is ‘actively seeking’ potential investors who can ensure its long-term sustainability, after the firm lost money as if failed to deliver vessels during a currency crisis triggered by central bank rate cuts.
“Considering the financial distress the Company is facing, the Board of Directors are actively seeking potential investors who can revitalize the company and ensure its long-term sustainability,’ the firm said in a letter to the Colombo Stock Exchange.
“The Company’s goal is to secure and investment that will help the Company navigate this difficult period and assist its future growth and success.”
“The Board of Directors are committed to transparency and will keep the market updated of any significant developments regarding this search for strategic investment.”
Colombo Dockyard was keeping the market informed of its moves following a going concern caution raised by the firm’s auditors in the last accounts.
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The firm got into trouble after failing to deliver the cable laying vessels due to delays and cost rises it experienced during the Covid pandemic and the currency crises later.
The firm had bid at a low price to enter the cable laying market.
Dockyard said its ship repair business was continuing to generate cash.
The company had also contracted to build four hybrid bulk carries to Misje Eco Bulk AS of Norway at a ‘competitive price point’. Construction was in progress.
Colombo Dockyard was intending to ‘expand its business ventures into a higher price point”.
The firm said it has secured engineering project in the Maldives.
It had established credit lines with banks and was working towards “preferential funding options.”
Large contracts require financial guarantees from banks as well as credit lines for working capital.
Dockyard said it will work on completing the remedial actions within 12 months of being transferred to a CSE watchlist. Any deviations would be filed within one market day.
If the matters are not resolved within 15 months from being transferred to the watchlist trading will be suspended. According to CSE rules after a 12 month suspension, the stock could be de-listed, the monthly announcement said. (Colombo/Dec06/2024)