BOC enforces legal action against MTD Walkers’ debenture default

Thursday, 1 August 2019 00:18 - - {{hitsCtrl.values.hits}}

Bank of Ceylon (BOC) has announced the enforcement of legal action against the default on debenture obligations by MTD Walkers Plc.

The Bank said it has handed over the documents pertaining to the matter to the Attorney General’s Department on 24 July in order to institute legal action against MTD Walkers for non-payment of interest due from the company to the investors, leading to an event of default. The disclosure to the CSE was to confirm BOC has made arrangements to enforce obligations pursuant to the Trust Deed dated 22 July 2015 through institution of legal action against MTD Walkers PLC as the Trustee to the debenture issue, and as per the resolution passed at the meeting of Debenture Holdings of MTD Walkers held on 2 May 2019.

Interest including penalties worth Rs. 126 million was due and payable on 31 March 2019 and the resolutions passed included the non-payment to be considered to be an event of default, and that the principal sum and interest on the debentures become payable immediately.

In 2015 MTD Walkers issued Rs. 2.9 billion worth of two types of debentures with 30 September 2019 as maturity date. It had repaid Rs. 1 billion out of Rs. 2.1 billion Type A debentures whilst there had been no settlement thus far on Rs. 886.7 million worth of Type B debentures.

MTD Walkers said that it was unable to meet the payment on the original date of payment due to the prevailing depressed market conditions and difficulties in the collection of funds.

It is in discussion with the Central Bank and some of the bankers to restructure bank facilities with a view to include the payment of debenture interests.

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