CT Holdings to raise Rs. 2.6 b to better tap new opportunities in post-war Sri Lanka

• Three UK based foreign funds to invest Rs. 2 b for 5.6% stake via private placement
• Proposes 1 for 55 Rights at Rs. 210 per share to raise Rs. 650.4 m
• New cash to fund Group’s real estate, leisure projects; reduce debt

To better harness new opportunities in post-war Sri Lanka, the Ceylon Theatres Group (now known as CT Holdings) is raising Rs. 2.6 billion of which Rs. 2 billion will be sourced via three UK based funds giving a further boost to the country’s profile internationally.

CT Holdings Board has resolved to issue 9.65 million shares or 5.6% stake of the Company by way of a private placement at Rs. 210 per share to three UK based funds. Via this exercise CT will raise Rs. 2.02 billion. The three UK funds are CF Ruffer Total Return Fund (4.3 million), CF Ruffer Absolute Return Fund (3.3 million shares) and CF Ruffer Pacific Fund (2 million shares). Each of these funds will hold the stakes through nominees of its custodian.

With 75% of the new fund raising exercise already confirmed, CT Holdings will raise Rs. 650.4 million via a one for 55 Rights issue to existing shareholders at Rs. 210 per share. The foreign funds taking part in the private placement will not be eligible for the Rights Issue.

CT said new cash raised via the private placement and rights issue which are subject to regulatory and shareholder approval will fund the Group’s real estate and leisure projects apart from strengthening the company’s balance sheet through the repayment of debt. 

Price of the company’s share, like several other fundamentally strong blue chips, was victimised due to a profit taking market. It closed at Rs. 208.20, down by Rs. 10 whilst it touched a high of Rs. 215.

Analysts said the fact that UK funds have confidence in investing in CT Holdings and Sri Lanka augurs well for prospects of both.  At present only 3% stake of CT is held by foreigners.

Several companies under the CT Group which has interests in retail and wholesale distribution, ceramic and tiles, real estate, food processing, plantations, restaurants, packaging and entertainment has been very aggressive post-war making strategic acquisitions as well as expansions.  Recent acquisitions and expansions are worth over Rs. 3 billion.

Analysts also said unlike in some private placements CT Holdings owners aren’t putting cash in their pockets but reinvesting in the company.  CT is controlled by Page family with Odeon Holdings owning 43.4% and individual members of Page family collectively owning over 25%. The private placement would see a marginal dilution of their holding. There are slightly over 2, 00 shareholders in CT with public shareholding amounting to 35%.

Early this week CT Holdings Plc reported strong performance for the 9 months ended 31 December, 2010 with Group posting an after-tax profit of Rs 1.3 billion, up 113% over the same period last year.  

Profit attributable to equity holders is Rs. 625 million which is a 155% growth over the previous corresponding period.  In the period ended, all sectors reported a sound performance while the retail and FMCG sectors continue to drive the Group’s growth momentum.

The Group had Rs. 4.1 billion in short term borrowing and Rs. 2.6 billion in bank overdrafts, up from Rs. 2.8 billion and Rs 1.3 billion as at 31 March, 2010 whilst bank loans repayable within one year was Rs. 353 million, down from Rs. 845 million as at 31 March, 2010. Total equity amounted to Rs. 15.7 billion whilst Group assets were Rs. 33.3 billion, up from Rs. 28.6 billion as at 31 March, 2010 and Rs. 24 billion as at 31 December, 2009.