Saturday Dec 14, 2024
Saturday Dec 14, 2024
Monday, 29 March 2021 02:13 - - {{hitsCtrl.values.hits}}
Blue Diamond Jewellery Worldwide PLC has announced a move to reduce its stated capital as well as plans for a Rights Issue and a private placement if necessary to overcome the going concern issue.
The Securities Exchange Commission (SEC) also granted a deferment for the suspension of trading of shares that was due to take place with effect from 17 March until 31 December to overcome the emphasis of matter on Going Concern, which was triggered by the serious loss of capital.
In a filing to the Colombo Stock Exchange, the company said it will undertake a reduction in its stated capital to reverse the serious loss of capital situation.
Barring any unexpected delays due to the ongoing COVID-19 situation, the company expects to complete this process within the next two months. In the event of the company is unable to overcome the emphasis of matter on Going Concern subsequent to the reduction of stated capital, the company will undertake a Rights Issue in the third quarter of financial year 2021/2022. The company will also consider a Private Placement to meet the going concern requirement, if necessary.
As per the published Interim Quarterly Financial Statements for the three months ended 31 December 2020, the company has made a profit of Rs. 10.5 million. However, such profits are barely sufficient to wipe off the carried forward losses up to 31 March 2020. The main reasons attributable to these losses were high administration and overhead costs, inadequate sales and marketing efforts, financial mismanagement and improper utilisation of rights issues funds.
Retained loss as at 31 December 2020 was Rs. 272 million, down from Rs. 389 million a year ago.
The Annual Reports pertaining to these years describe in detail the causes for these losses. The losses adversely affect the company’s ability to pay a dividend to its shareholders in the future as well as comply with the CSE Listing Requirements.
Therefore, it has become necessary for the company to restructure its Stated Capital by writing off the losses incurred against such Stated Capital. This will better enable the company to source funds to its future requirements.
Accordingly, the Board of Directors of the company has decided to carry out a reduction of Stated Capital from Rs. 373.6 million constituting of the monies received by the company for the issue of Rs. 401.2 million ordinary shares comprising of 206,601,782 fully paid ordinary voting shares and 194,633,623 fully paid non-voting shares to Rs. 101.26 million in accordance with Section 59 of the Companies Act No. 07 of 2007 without any change to the number of shares issued.
The reduction of the stated capital is subject to shareholder approval at a General Meeting by way of a Special Resolution.
