Maloney plays musical chairs!

Saturday, 28 September 2013 00:00 -     - {{hitsCtrl.values.hits}}

  • Steps down yet again as Chairman of Touchwood Investments PLC but to remain on Board as Non-Executive Independent Director; wife Swarna follows suit
  • Kiwlegedera in meteoric rise: From Business Development Manager/Director to Executive Director, Acting CEO to finally as Chairman within days
  • Dr. Sujeewa Lokuhewa appointed as new CEO/Director
  • CSE suspends trading of TWOD shares pending disclosure from company on media reports
  Instead of growing trees for harvesting, Touchwood Investments PLC is becoming fertile ground for overnight directors judging by the slew of announcements this week. Yesterday the company announced the founder and Chairman Roscoe Maloney has stepped down as Chairman but will remain as Non Executive Independent Director. Following suit was also his wife who has stepped down as Vice Chairperson/CEO but will remain on the Board. This was not the first time Maloney had stepped down as Chairman. The last instance was in January 2012 to accommodate veteran banker Rienzi T. Wijetilleke to assume that role on invitation though the latter opted to quit a few months later in July 2012. This time, Lanka Wijendra Kiwlegedara has been appointed as the Chairman. For him, it has been a meteoric rise. It was on Tuesday that he was appointed Executive Director after being Business Development Director/Manager previously within the senior management. On Wednesday he was made Acting CEO whilst on Thursday he had to chair the AGM in the absence of the Maloneys. When his appointment to the Board was announced, Kiwlegedera was identified not as Business Development Director but as the founder and Deputy Chairman/Chief Operations Director of Woolim Lanka Ltd., a BOI approved mineral export firm and Managing Director of Asian Investments and Mercantile Services Ltd. TWOD also announced yesterday that one Dr. Sujeewa Lokuhewa was named as CEO/Director. Lokuhewa was described as the Director/Group CEO of ETI Regent Group, with expertise in accounts, special management techniques, human resource management and legal aspects. The stepping down of Maloney as Chairman was consequent to calls by shareholders at the AGM. The changes however were linked to a Board decision. The announcement came amidst suspension of trading of TWOD shares by the Colombo Stock Exchange (CSE) pending clarifications/disclosures from the company on media reports of the AGM held on Thursday. The Daily FT yesterday reported that the Maloneys who are overseas played a recorded video message at the AGM assuring “all is well.” His (Maloney) stepping down soon after however proved otherwise. Kiwlegedera also told the AGM that investors were being lined up to infuse $ 21 million into the company. He expressed confidence that share price will be driven to the Rs. 15 level in the coming months. He may have been inspired by the speculation-fuelled rise in TWOD share prices in recent weeks, closing at Rs. 4.80 from a lowest of 90 cents. Fundamentals or a quick revival weren’t the factors as per analysts, though some linked the share price gain to positivism following the appointment of controversial MP Duminda Silva to the TWOD Board as an Independent Director. Nevertheless, around 105 million TWOD shares were subject to recycling of trades between Monday and Thursday. Not only retailers but even several institutional investors were seen recycling trades within hours on Thursday. For the TWOD Board, shareholders and customers, the coming week will be critical as a winding up application before the Western Province High Court case is expected to be supported on 3 October. Kiwlegedera has reportedly stated that the company would reach a settlement with the customer who has filed the application claiming dues worth Rs. 3.8 million. However TWOD is likely to face fresh litigation. The Securities and Exchange Commission (SEC) though quite vocal and aggressive including the imposition of six-market-day trading suspension from 9 to 16 September and revealing that full scale investigations are on, has since of late remained silent. Analysts have been baffled by the selection and eventual appointment of new directors including MP Duminda Silva. Some of these appointments have prompted good governance activists to raise the red flag. Touchwood styles itself as the pioneer of the agro-forestry investment industry in Sri Lanka. It specialises in the cultivation of high value exotic tropical timbers as an alternative and sustainable source of forest products (mahogany, vanilla, sandalwood, teak and other cash crops). As per its 2012/13 Annual Report, TWOD had planted over 400 trees of high-value timber in 2,854 acres spanning 42 plantations in six districts. This is in addition to timber plantations in Thailand for which customer deposits have been taken by the company. As at end FY13, TWOD’s assets amounted to Rs. 8 billion, up from Rs. 6.8 billion in the previous year. Despite styling itself as pioneer and in business for over a decade, TWOD remains saddled with over Rs. 500 million worth retained losses. Liabilities amounted to Rs. 4.7 billion as at end FY13, up from Rs. 3.7 billion a year earlier.