Tess Agro to issue Rs. 250 m unsecured debentures with warrants

Wednesday, 28 January 2026 00:23 - - {{hitsCtrl.values.hits}}

Tess Agro PLC said its Board of Directors has resolved to issue and list unsecured debentures with attached warrants, subject to shareholder approval and regulatory clearance.

The company plans to issue 2.5 million unsecured debentures at a face value of Rs. 100 each, raising Rs. 250 million. The debentures will carry a fixed interest rate of 6% per annum, payable annually, with a tenure of five years and repayment at maturity.

The debentures will rank pari passu with other unsecured creditors, and a trustee will be appointed prior to the opening of the issue.

Alongside the debentures, Tess Agro proposes to issue 100 million warrants, on the basis of 40 warrants for every one debenture. Each warrant will entitle the holder to subscribe for one ordinary voting share of the company at an exercise price of Rs. 2.20 per share. The warrants will be exercisable after one year from the date of issue and will remain valid for a period of two years.

If fully exercised, the warrants could raise up to Rs. 220 million in additional equity capital, although the company will receive these proceeds only to the extent that warrant holders choose to exercise their rights during the exercise period.

The warrants will be listed on the Colombo Stock Exchange and will be freely transferable. The total number of shares arising from the exercise of warrants, together with any other outstanding unexercised warrants, will not exceed 15% of the company’s total voting shares at the time of submission of the listing application, in line with Colombo Stock Exchange listing rules.

Tess Agro said proceeds from the debenture issue will be used to repay existing borrowings and to meet working capital requirements and capital expenditure. Funds raised through the exercise of warrants, if any, will be used to strengthen the company’s capital base and support future expansion.

The company said its current public holding stands at 48.7%.

The proposed issue and listing remain subject to approvals from the Colombo Stock Exchange and shareholders by way of a special resolution at a duly convened general meeting.

The company reported net assets of 38 cents per share as of end-September 2025. It reported short term borrowings at Rs. 50.3 million and long-term borrowings were Rs. 378.3 million on a balance sheet of Rs. 884.2 million with retained losses at Rs. 441.9 million.

Major shareholders were IPEK Ltd (29.99% stake), Silver Edge Investments Ltd (24.87%) D. Fernando (16.32%) and S.A. Fernando (3.59%), as of end-September 2025.

Tess Agro shares closed up 30 cents yesterday at Rs. 2.20 on over 28.1 million shares traded for a turnover of Rs.60 million.