- Announces Rs. 540 m Rights Issue to part-finance the venture
Laxapana Batteries Plc is to diversify into renewable energy with an investment of over Rs. 1 billion, of which Rs. 540 million will be sourced via equity.
It has announced a Rights Issue of 12 new shares for 13 held at Rs. 15 each, which will entail issuance of 36 million shares worth Rs. 540 million.
The Board of Directors has resolved that, in their opinion, the consideration for which the shares are to be issued is fair and reasonable to the entity and all existing shareholders. Net assets value per share as at 30 September 2020 was Rs. 6.06.
EB Creasy holds a 51% stake in Laxapana Batteries Plc whilst it has 1,556 public shareholders holding a 34% stake. The stated capital of the company is Rs. 138 million.
In a filing to the CSE, the company said it intended to look into long-term debt to benefit from the prevailing low interest regime. It does not hold any long-term debt presently.
Laxapana Batteries Plc was set up in 1956 to manufacture dry cell batteries. At that time, it was one of the first industrial ventures set up to cater to the needs of rural hinterland of the country.
By 2012, the company lost its competitiveness due to open market policies and technological developments in the dry cell batteries and ceased manufacturing operations.
The Laxapana brand, however, established in 1956 and synonymous with the first major hydropower scheme in the country (established a few years prior in 1950), enabled the company to continue trading in a variety of imported dry cell batteries and LED lighting.
The Directors have been aware of the need to develop a sustainable business model since it ceased to manufacture dry cell batteries. They have been looking for low-risk opportunities to diversify the company's trading and to enhance income streams so that shareholders are guaranteed a reasonable return on their investments.
The Board has identified opportunities in the renewable energy sector that are in alignment with the Government policy of increasing the share of renewable energy production in the nation's total energy needs.
Having evaluated prospects in this space, the company intends to invest over Rs. 1 billion in generating renewable energy over the next 18 months.
“The Board is confident that subject to any unforeseen circumstances, the investment will generate adequate returns to shareholders,” the filing to the CSE said.
The Rights Issue is subject to the Exchange approving, in principle, the issue and listing of shares and obtaining shareholder approval at an Extraordinary General Meeting of the company.