Commercial Credit and Finance PLC, formerly known as Commercial Credit, intends to raise Rs. 250 million (Rs. 250,000,000) through a listed debenture issue to successfully implement the future strategies in their three year strategic plan.
The issue comes with an option to increase the sum up to Rs. 500 million in the event of an over subscription of the initial amount. These debentures will provide a coupon rate of 20% and will be paid quarterly, resulting in an annual effective rate (AER) of 21.55%.
As announced in the Budget for 2013, the interest income from investments made on or after 1 January 2013 in corporate debt securities listed on the Colombo Stock Exchange will be exempt from income tax including the deduction of withholding tax (WHT). Given the interest rate drop and exemption on WHT and income tax, this is an ideal investment for fixed income securities investors.
Commercial Credit was incorporated on 4 October 1982 under the Companies Act No. 17 of 1982 and re-registered under the Companies Act No. 07 of 2007. It is a registered finance company registered under the Finance Companies Act No. 78 of 1988 and Finance Business Act No. 42 of 2011. The company reported net interest income of Rs. 1.16 billion during the six months ending 30 September 2012, against Rs. 723.2 million a year ago, which is a remarkable achievement. The company’s net profit for six months stood at Rs. 270.3 million as at 30 September 2012 and holds Rs. 12 billion worth of financial and nonfinancial assets.
The Corporate Advisory and Capital Markets Division of Merchant Bank of Sri Lanka PLC (MBSL) are the Managers and Registrars to this debenture issue. Being the pioneers in the managers and registrars function for debentures, they have carried out many successful listed and unlisted debentures in the past. Merchant Bank of Sri Lanka PLC, incorporated in March 1982, is the pioneer investment/merchant bank in Sri Lanka and was quoted on the Colombo Stock Exchange in 1991. The bank’s largest shareholder is the Bank of Ceylon which holds a strategic stake of 72.14% and in 2005, MBSL entered into a strategic alliance with SBI Capital Markets Limited, which is the largest investment bank in India.