Investors toast Lankem Developments’ Rs. 2.5 b Rights

Thursday, 10 March 2011 00:54 - - {{hitsCtrl.values.hits}}

Investors were quick to toast good news yesterday from Lankem Developments Plc, signalling its bullishness in post-war Sri Lanka.

The company announced a 15 for one rights issue at Rs. 25 each, thereby intending to raise Rs. 2.5 billion.

Of the funds raised Rs. 1.18 billion will be invested in acquiring 47.4 million shares or a 61.8% stake in Agarapatana Plantations Ltd., at Rs. 25 per share. The stake is held by related parties Lankem Plantation Holdings (54%) and Kotagala Plantations (7.8%).

Agarapatana Plantations cultivates high grown tea in the Agarapatana and Uva tea growing districts.

The remaining funds would be retained by Lankem Developments for investments in the leisure industry, hydro power plants and further into plantations. Lankem Development saw its share price up by Rs. 1.80 to Rs. 47.10 with 1.93 million shares traded for Rs. 93 million.

Its parent saw its share price up by Rs. 2.40 to Rs. 402.20. Their respective intra-day peaks were Rs. 56 and Rs. 410 and both figured among select few gainers in a crashing market.

Kotagala’s share price closed up 50 cents to Rs. 170.50 after touching a high of Rs. 179.50. In 2009/10 accounts Kotagala had stated the 6 million ordinary shares investment in Agarapatana at Rs. 120. The proposed sale at Rs.25 per share will fetch Rs. 150 million.