Saturday May 04, 2024
Saturday May 04, 2024
Monday, 11 March 2024 02:26 - - {{hitsCtrl.values.hits}}
Chairman and Managing Director Ashok Pathirage
Loss-making and debt saddled Softlogic Holdings PLC has announced a Rs. 10 billion equity capital raising plan subject to shareholder approval.
The fund raiser is to settle the debt of the Company and for the working capital requirements of the Company/Group.
The plan comprises three components - Rs. 2.98 billion via a Rights Issue, Rs. 1.87 billion by issuing warrants attached to the proposed Rights and Rs. 5.1 billion in a manner to be decided by the Board upon completion of the first two components.
Proposed Rights Issue is on the basis of one share for every four held at Rs. 10 each. It entails issuing 298,135,803 shares. The current stated capital of SHL is 12.2 billion. Total equity as at 30 September 2023 was a negative Rs. 20.7 billion, up from Rs. 3.8 billion a year ago and Rs. 13 billion as at 31 March 2023.
The Rights subscribed shall have attached thereto Warrants in the following manner: Issue up to 178,881,481 warrants in the ratio of three warrants for every five rights shares subscribed, exercisable on 31 December 2024, at an exercise price of Rs. 10.50 to raise Rs. 1.87 billion.
SHL said the Rs. 2.98 billion Rights Issue will not be underwritten. However Chairman and Managing Director Ashok Pathirage who owns 41.35% stake and Samena Ceylon Holdings Ltd., owning 21% being major shareholders of the Company have indicated that they will subscribe to their entire entitlement of rights together with the exercise of Warrants.
The Board of Directors have also decided to revert with a mechanism to raise the remaining Rs. 5.14 billion in due course in consultation with the relevant parties and the regulatory authorities subject to obtaining the regulatory approvals as applicable.
In the event if it is a Rights Issue, the two major shareholders, have further indicated that they will also subscribe for their full entitlement in the process of raising the remaining equity infusion of up to Rs. 5.14 billion.
SHL said a further announcement in this regard will be made to the Colombo Stock Exchange upon reaching such a decision by the Board of Directors of the Company.
Trading of the shares of the Company has been suspended with effect from 8 December 2023 due to non-submission of Annual Report for the year ended 31 March 2023. The securities of the Company will remain in the Watch List due to non-submission of Annual Report for the year ended 31 March 2023 and Qualified Audit Opinion and Emphasis of matter on going concern in the Independent Auditor’s Report in the Audited Financial Statements for the year ended 31 March 2022 and non-submission of the Interim Financial Statements for the quarter ended 31 December 2023.
Apart from Pathirage and Samena Ceylon Holdings, other major shareholders include SHL Directors H.K. Kaimal (6.75%), R.J. Perera (6.3%), G.W.D.H.U. Gunawardena (6%), Samena Special Situations Fund III and II (5.76%) and Pemberton Asian Opportunities Fund (3.95%). LP The public holding at SHL is 13% held by 10,065 shareholders as at 30 September 2023.
As at 30 September 2023, SHL Group retained losses amounted to Rs. 59 billion, as against Rs. 34 billion a year ago and Rs. 49 billion as at 31 March 2023. SHL Group short-term interest bearing borrowings amounted to Rs. 16 billion and Rs. 46 billion in long-term. Other current liabilities amounted to Rs. 53 billion.
In the 2Q of FY24 SHL saw Group revenue increase by 5% to Rs. 8.3 billion and for the first half up 1% to Rs. 48 billion. Finance cost reduced by 26% to Rs. 5.5 billion in 2Q and by 13% to Rs. 11.3 billion in 1H. Pre-tax loss in 1H was Rs. 7.5 billion as against Rs. 5.4 billion a year ago. Pre-tax loss in 2Q was down Year on Year by 14% to Rs. 3.6 billion. Loss attributable to equity holders of parent rose by 29% to Rs. 9.7 billion in 1H of FY24.
In FY23, revenue declined by 13% to Rs. 97.3 billion, gross profit dipped by 7% to Rs. 34.6 billion. Net finance cost rose by 138% to Rs. 21.5 billion. Pre-tax loss was Rs. 17.5 billion and after tax figure was Rs. 20.5 billion. In FY23 the Loss attributable to equity holders of the parent was Rs. 17.5 billion.
In FY22, SHL posted its highest ever Group revenue of Rs. 111.3 billion, gross profit of Rs. 37.3 billion, EBITDA of Rs. 14 billion and Group earnings before interest and taxation of Rs. 10 billion. Pre-tax profit loss was Rs. 3.5 billion, marginally up from Rs. 3.8 billion loss in FY21 and after tax loss of Rs. 5.2 billion in FY22 as against Rs. 4 billion loss in FY21. In the Annual Report of FY22, Pathirage in the Chairman’s Review dated 20 November 2023, spoke of the immediate review and the implementation of radical structural changes, and more importantly, a credible debt reduction plan to enhance the Group as a strong enterprise is urgently being undertaken.
“Group will be looking into streamlining its operations and deleveraging itself to stay ahead of the curve. We have, therefore, decided to shed unproductive assets, review the internal operating processes and make some painful decisions to enhance liquidity and strengthen the financial standing of the Group. We have thus closed down low yielding showrooms and rebalanced our portfolio investments in key sectors with a view to halt the erosion of capital and return the Group to profitability,” Pathirage said.
“Investments in key areas are being progressed in anticipation of an economic recovery and a credible debt reduction strategy. At the same time, to add value to the promising sectors of the Group, we will not be averse to reduce our stake in any one of our subsidiaries should opportunities arise to make the Group more agile to face the uncertain future. We are thereby committed to create value in our portfolio and will also look offshore for investment opportunities given the persisting economic crisis in the country,” SHL Chairman Pathirage added in his review in FY22 Annual Report.
