Wednesday, 15 October 2014 00:57
Strikes deal to sell 75% stake in power subsidiary for Rs. 1.68 b to consortium of NDB Capital, ACL Cables and Trydan Partners
Hemas Holdings PLC yesterday announced that it has entered into an agreement to sell its shareholding in Hemas Power PLC to a consortium of buyers, consisting of NDB Capital Holdings PLC, ACL Cables PLC and Trydan Partners Ltd.
The entirety of its shareholding in Hemas Power PLC will be sold for Rs. 1.68 billion. Hemas Holdings PLC represents 75% of the shareholding of Hemas Power, consisting of 93,900,000 out of the 125,200,002 ordinary shares of Hemas Power in issue. This sale is subject to regulatory approval. Hemas Group CEO Steven Enderby said: “This is an important move for us given the change in the Group’s strategic direction to realign its portfolio to focus on its core strengths of wellness, leisure and mobility.
Therefore we have been looking for a new parent for this business with a stronger strategic focus to take the power business forward. The consortium of buyers was chosen after a rigorous process of evaluation by the Board of Directors of Hemas Holdings PLC. We wish the consortium every success going forward.
Hemas entered the power sector with its investment in a 100MW thermal power plant Heladhanavi in 2003. With its investment in the Giddawa hydro power plant in 2006, the sector entered the renewable energy segment by adding on two more plants in Agra Oya and Magal Ganga taking the capacity up to 7MW.
The company was listed in 2009 with the intention of building its presence in renewable energy space. In 2013, the company invested in a 29.3% stake of Pan Asian Power PLC, including a portfolio of two hydro power plants with a total capacity of 4.4MW.
Hemas Holdings PLC is a diversified conglomerate with a focus on four key sectors namely; healthcare, fast moving consumer goods, transportation and leisure.
The deal price is Rs. 17.90 per share which is above the Net Asset Per Share of Hemas Power is Rs. 19.52 (Group) and Rs. 13.33 (Company). The share traded yesterday at Rs. 16.80. In the quarter ended in June the highest price of Hemas Power was Rs. 20 and the lowest was Rs. 17.10 with a closing price of Rs. 17.90.
Other major shareholders of Hemas Power include ETF (1.27%), Bank of Ceylon (0.9%), NSB (0.7%). Public float is 25%.
The company recorded a consolidated net loss of Rs.54.3 million in the quarter ending 30th June 2014 owing to the loss of Rs.77 million in Heladhanavi. The Heladhanavi loss was offset by the profit of Rs. 48.4 million made by the hydropower segment.
The loss reported in Heladhanavi arose largely from a “heat rate bonus” payment. Under the Operations and Maintenance (O&M) Contract entered into between Heladhanavi and
Lakdhanavi Ltd, Heladhanavi will either pay a bonus to or receive a penalty from
Lakdhanavi Ltd based on the difference between the actual fuel consumption rate at the power plant and that guaranteed by Lakdhanavi. This arrangement incentivizes
Lakdhanavi to run the plant more efficiently.
On the other hand, the net profit of the three fully-owned hydropower plants and the two plants owned via Panasian Power PLC stood at Rs.48.4 million for the quarter under review. This reduction of 60% relative to the comparative quarter of the previous year is due to the delay in the south-west monsoon and a lower rainfall experienced in the catchment areas.