Swiss firm to take up 33% stake in Tess Agro for Rs. 84 m via private placement

IPEK S.A. Switzerland is to take up a 33% stake in Tess Agro PLC for Rs. 84 million via a private placement.

IPEK is a diversified group of companies involved in oil trading, engineering and waste recycling. In a bid to enter the food industry, it has expressed interest to make an investment in Tess via a private placement.

The private placement will be at 50 cents per share and is subject to approval from the Securities and Exchange Commission, the Colombo Stock Exchange and shareholders at an EGM. The current stated capital of Tess Agro is Rs. 407.8 million, represented by 339.8 million voting shares and 50 million of non-voting shares. Tess said proceeds from the private placement will be used to fund a tin can manufacturing project for exports.

Net assets value per share of Tess is 25 cents as of 30 June 2021, whilst at the end of FY21 it was 29 cents. Yesterday, the company saw 4.8 million of its shares change hands via 130 trades for Rs. 3.3 million before closing at 70 cents, up by 16.7%.

Last week, an unusually high volume of 54.7 million voting shares of Tess traded for Rs. 37.2 million.

It closed the June quarter at 30 cents, whilst the highest was 70 cents.

In FY21, Tess Agro turnover was Rs. 8.4 million, up from Rs. 6.2 million in the previous year. Gross profit was Rs. 1.3 million as against Rs. 0.17 million in FY20.

However, high administrative expenses led to an operating loss of Rs. 51.6 million in FY20 and a loss of Rs. 5 million in FY21. After tax loss was Rs. 7.7 million in FY21, lower in comparison to Rs. 61.4 million in the previous year. Turnover in 1Q of FY22 was Rs. 2.3 million, whilst the loss was Rs. 3.8 million. Tess Ltd. owns 31% and related parties control a further 10%. Public holding is 41% held by 4,581 shareholders.