Merchant Bank of Sri Lanka and Finance, a subsidiary of Bank of Ceylon, plans to raise Rs. 999.12 million through a rights issue, the company said in a stock-exchange filing.
The non-banking financial institution will offer 99,912,312 new preference shares at Rs. 10 each on the basis of four new preference shares for every 21 existing ordinary shares.
The shares will be non-redeemable, non-convertible and non-cumulative, paying a variable non-cumulative dividend reviewed every five years. The dividend will be set at the prevailing five-year government securities yield plus a 100 basis-point premium, subject to a maximum cap of Rs. 1.05 per share annually.
The proceeds are to be used to strengthen the company’s Tier I capital and support future business growth. The issue has received Central Bank approval and is pending CSE and shareholder sign-off.
Tier I-strengthening rights issues have become a recurring fixture in Sri Lanka’s listed finance sector this cycle, alongside Hayleys’ Rs. 9bn rights call and HNB Finance and Vallibel Finance capital raises as banks and NBFIs adjust to higher risk-weighted asset requirements.
Source: EconomyNext.
