SG Holdings, the parent company of Expolanka Holdings Plc, announced on March 1 it was delisting the company from the Colombo Stock Exchange.

Some minority shareholders have filed a case challenging the delisting of Expolanka Holdings PLC before the Court of Appeal of Sri Lanka.

The court is scheduled to hold a further hearing on June 6.

“By reason of the aforesaid and by reason of the many requests received by Foreign shareholders and representatives of deceased shareholders requesting additional time, the Company has taken the decision to extend the Exit Offer till 4.30 PM on Monday, 10th June 2024,” Expolanka said in a stock exchange filing.

“The Payments for the Offer received from 4th June 2024 to 10th June 2024 hall be made on or before, 28th June 2024.

“The timelines as set out in the original Exit Offer too shall continue to remain.” (Colombo/June3/2024)

A bond maturing on 15.12.2026 was quoted up at 9.75/85 percent from 9.80/95 percent.

A bond maturing on 15.09.2027 was quoted at 10.40/50 percent from 10.40/55 percent.

A bond maturing on 01.07.2028 was quoted stable at 10.80/90 percent.

The Colombo Stock Exchange opened down. The All Share Price Index was down 0.03 percent at 12,103, the S&P SL20 was down 0.14 percent at 3,563. (Colombo/June3/2024)

Rodrigo is a banker with a track record of senior leadership roles across multiple industries and previously served as executive director/chief operating officer at Hatton National Bank.

He is the current Deputy CEO, and will assume the role of Director/CEO of Union Bank on August 16, subject to regulatory approvals. Rodrigo will spearhead the organization’s next phase of growth.

Wickramasinghe is an accomplished professional with a successful management career spanning over 35 years across local and multinational organizations in the FMCG and financial services sectors.

He has held numerous non-executive board appointments in sectors such as insurance, wealth management, stock brokering, property management, finance companies, and commercial banking.

During his tenure at Union Bank, Wickramasinghe played a pivotal role in transforming the institution from a limited asset book bank to a fully-fledged vibrant commercial bank with an asset book exceeding 130 billion rupees.

The bank maintains one of the highest capital adequacy ratios in the country and recently relaunched its corporate brand identity. (Colombo/May31/2024)

A bond maturing on 15.12.2026 closed up at 9.80/95 percent from 9.70/80 percent.

A bond maturing on 15.09.2027 closed stable at 10.40/55 percent.

A bond maturing on 01.07.2028 closed up at 10.80/90 percent from 10.70/80 percent.

A bond maturing on 15.01.2030 closed up at 11.65/75 percent from 11.60/80 percent.
(Colombo/May31/2024)

The broader All Share Index closed down 0.52 percent, or 63.64 points, at 12,106; while the S&P SL20 Index closed down 0.47 percent, or 16.77 points, at 3,569.

Turnover was 1.1 billion. Most of this came from the food, beverage and tobacco stocks (Rs287mn) and capital goods stocks (Rs251mn).

Melstacorp Plc saw the most active volumes traded in the day. The share closed down at 88.00.

Chevron Lubricants Lanka Plc closed up at 123.25.

Hemas Holdings Plc closed up at 87.00.

Selling pressure was seen on some banking stocks. Sampath Bank Plc closed down at 78.40, Commercial Bank of Ceylon Plc closed down at 105.75, and DFCC Bank Plc closed down at 77.40.

However, Hatton National Bank Plc closed up at 195.25, and National Development Bank Plc closed up at 78.80.

There was a net foreign inflow of 121 million. (Colombo/May31/2024)

A bond maturing on 15.12.2026 was quoted stable at 9.70/80 percent.

A bond maturing on 15.09.2027 was quoted down at 10.35/50 percent from 10.40/55 percent.

A bond maturing on 01.07.2028 was quoted stable at 10.70/80 percent.

A bond maturing on 15.05.2030 was quoted at 11.55/75 percent.

The Colombo Stock Exchange opened up. The All Share Price Index was up 0.10 percent at 12,182, the S&P SL20 was down 0.23 percent at 3,594. (Colombo/May31/2024)

A bond maturing on 15.12.2026 closed down at 9.70/80 percent from 9.70/85 percent.

A bond maturing on 15.09.2027 closed up at 10.40/55 percent from 10.30/40 percent.

A bond maturing on 01.07.2028 closed stable at 10.70/80 percent.

A bond maturing on 15.01.2030 closed up at 11.60/80 percent from 11.50/75 percent.

A bond maturing on 01.10.2032 closed at 11.80/90 percent from 11.80/95 percent. (Colombo/May30/2024)

The broader All Share Index closed up 0.56 percent, or 67.77 points, at 12,170; while the S&P SL20 Index closed up 1.08 percent, or 38.46 points, at 3,585.

Turnover was 1.3 billion.

Sampath Bank Plc (Rs264mn) saw the most active volumes traded in the day. The share closed up at 78.60.

Commercial Bank of Ceylon Plc, which announced a capital call of 22 billion rupees earlier this week, closed up at 107.00.

Banking stocks picked up during the day after seeing some selling pressure yesterday on the back of the Commercial Bank announcement.

DFCC Bank Plc closed up at 77.80, Hatton National Bank Plc closed flat at 194.50, and National Development Bank Plc closed up at 78.10.

There was a net foreign outflow of 105 million. (Colombo/May30/2024)

Mihular was Managing Partner of KPMG Sri Lanka and Maldives from 2012 to 2022 and chaired KPMG’s Middle East and South Asia Regional Cluster, where he also acted as Chief Operating Officer.

He holds directorships at various public listed companies, including Watawala Plantations and Sunshine Holdings.

He is a Commissioner at the Colombo Port City Economic Commission and a member of the Stakeholder Engagement Committee of the Central Bank of Sri Lanka.

Outgoing Chairman Wijesinha has served on the boards of both Watawala Plantations and Watawala Dairy Ltd. In September 2023, he was honoured with the ‘Order of the Rising Sun’ by the Government of Japan, in recognition of his contribution to strengthening economic relations and promoting mutual understanding between Japan and Sri Lanka.

Watawala Plantations, a diversified agribusiness company, is a joint venture between Sunshine Holdings and Pyramid Wilmar Plantations Pvt Ltd. (Colombo/May30/2024)

A bond maturing on 15.12.2026 was quoted at 9.70/80 percent from 9.70/85 percent.

A bond maturing on 15.09.2027 was quoted up at 10.25/35 percent from 10.30/40 percent.

A bond maturing on 01.07.2028 was quoted up at 10.75/80 percent from 10.70/80 percent.

The Colombo Stock Exchange opened up. The All Share Price Index was up 0.09 percent at 12,113, the S&P SL20 was down 0.16 percent at 3,552. (Colombo/May30/2024)

The exit offer price is 240 rupees per share, the company said in a stock exchange filing.

“The Board of Directors of the Company has made arrangements with Aitken Spence PLC, MJ F Holdings (Private) Limited, and Mr. D. A. de S. Wickramanayake, three largest shareholders of the Company (the “Major Shareholders”) and the Major Shareholders have indicated the willingness to acquire the shares of the minority shareholders of the Company who may wish to divest/sell their shares.”

The total shares that the minority shareholders wish to sell under the exit offer will be purchased by the Major Shareholders in proportion to their respective shareholding percentages vis a vis each other by adopting a suitable and practical modality agreed upon with the Company, so that the Major Shareholders will maintain their respective shareholding percentages in the Company post de-listing.

A circular to the shareholders detailing the rationale of the proposed de-listing, together with the notice of Extraordinary General Meeting, convening an EGM to seek shareholder approval in relation to the aforesaid de-listing of shares will be dispatched to the shareholders of the Company shortly, the company said.

The share last traded at 56.80.
(Colombo/May29/2024)

A bond maturing on 15.12.2026 closed down at 9.70/85 percent from 9.90/10.05 percent.

A bond maturing on 15.09.2027 closed down at 10.30/40 percent from 10.30/55 percent.

A bond maturing on 01.07.2028 closed down at 10.70/80 percent from 10.90/11.00 percent.

A bond maturing on 15.01.2030 closed down at 11.50/75 percent from 11.60/80 percent.

A bond maturing on 01.10.2032 closed down at 11.80/95 percent from 11.85/12.00 percent. (Colombo/May29/2024)

The debt office sold all 30 billion rupees of 3-month bills offered at 8.62 percent down from 8.76 percent.

All 50 billion rupees offered of 6-month bills were sold, at 9.04 percent, down from 9.17 percent.

And all 80 billion rupees offered of 12-month bills were sold at 9.18 percent, down from 9.29 percent.
(Colombo/May29/2024)

The broader All Share Index closed down 1.03 percent, or 125.76 points, at 12,102; while the S&P SL20 Index closed down 1.99 percent, or 71.95 points, at 3,547.

Turnover was 1 billion.

Commercial Bank of Ceylon Plc (Rs221mn) and Sampath Bank Plc (Rs207mn) saw selling pressure. Commercial Bank voting shares closed down at 103.50, while non-voting shares closed down at 83.00. Sampath Bank shares closed down at 77.50.

Commercial Bank, the largest private bank by assets, announced yesterday a capital call from shareholders of 22 billion rupees, offering voting shares at 85 rupees and non-voting at 69 rupees.

The 22.52 billion rupees will used to bolster Tier 1 capital to accommodate future lending, the firm said.

“There was a sharp decline in the market from the bell, mainly due to Commercial Bank. There was significant selling pressure on the bank’s shares which trickled to other banking stocks too,” market participants said.

Commercial is the first bank to make a cash call after bad loans and and a sovereign default dented banks following steep rates cuts made in 2020 to target ‘potential output’ by macro-economists.

“There was uncertainty in all banking shares.”

Banking stocks fared poorly in the day. DFCC Bank Plc closed down at 76.50, Hatton National Bank Plc closed down at 194.50, and National Development Bank Plc closed down at 76.40.

There was a net foreign outflow of 24 million. (Colombo/May29/2024)

The bank made a capital call from shareholders of 22 billion rupees, offering voting shares at 85 rupees and non-voting at 69 rupees.

Commercial Bank will offer 252,082,449 shares in the proportion of 1 for every exiting 5, to raise 21.42 billion rupees, the bank said Tuesday in a stock exchange filing.

Related story
Sri Lanka’s Commercial Bank in rights issue to raise Rs22bn

The 22.52 billion rupees will used to bolster Tier 1 capital to accommodate future lending, the firm said.

Commerical is the first bank to make a cash call after bad loans and and a sovereign default dented banks following steep rates cuts made in 2020 to target ‘potential output’ by macro-economists. (Colombo/May29/2024)

A bond maturing on 15.12.2026 was quoted up at 9.90/10.00 percent from 9.90/10.05 percent.

A bond maturing on 15.09.2027 was quoted at 10.35/45 percent from 10.30/55 percent.

A bond maturing on 01.07.2028 was quoted stable at 10.90/11.00 percent.

The Colombo Stock Exchange opened down. The All Share Price Index was down 0.82 percent at 12,127, the S&P SL20 was down 1.72 percent at 3,556. (Colombo/May29/2024)

“Nine minority shareholders of Expolanka Holdings PLC holding approximately 0.012% of the shares thereof, have filed an application before the Court of Appeal of the Democratic Socialist Republic of Sri Lanka challenging the de-listing of Expolanka Holdings PLC.”

Both the Securities and Exchange Commission of Sri Lanka and the Colombo Stock Exchange have been made parties to the said application, the company said.

The limited Objections of the Respondents are due on Wednesday, May 29 and the matter is fixed for support on the May 31.

“The Company will be resisting the said application.”

SG Holdings, the parent company of Expolanka Holdings Plc, announced on March 1 it was delisting the company from the Colombo Stock Exchange.

SG Holdings Global Pte Ltd, the company’s majority shareholder, said it will purchase its shares from shareholders at 185.00 rupees a share.

The share last traded around 150.50, before the delisting was announced. Expolanka was the largest listed company on the Colombo Stock Exchange.

A valuation report by KPMG on Expolanka Holdings Plc suggested the value of a share between 136.9 rupees and 152.6 rupees, making the exit offer a generous offer. (Colombo/May28/20224)

A bond maturing on 15.12.2026 closed stable at 9.90/10.05 percent.

A bond maturing on 15.09.2027 closed up at 10.30/55 percent from 10.30/40 percent.

A bond maturing on 01.07.2028 closed up at 10.90/11.00 percent from 10.80/95 percent.

A bond maturing on 15.01.2030 closed stable at 11.60/80 percent.

A bond maturing on 01.10.2032 closed at 11.85/12.00 percent from 11.85/12.05 percent. (Colombo/May28/2024)

The broader All Share Index closed down 0.68 percent, or 83.20 points, at 12,228; while the S&P SL20 Index closed down 0.85 percent, or 31.15 points, at 3,619.

Turnover was at 915 million.

Sampath Bank Plc which closed down at 77.80, saw the most active volumes traded in the day.

Banking stocks were down except for Seylan Bank Plc which closed up at 40.00. Hatton National Bank Plc, closed down at 196.25, Commercial Bank of Ceylon Plc closed down at 112.75, and DFCC Bank Plc was down at 79.50.

Dialog Axiata Plc, which announced a cash dividend, closed down at 11.00.

John Keells Holdings Plc closed down at 207.00, Hayleys Plc closed down at 92.50. Aitken Spence Plc closed up at 130.00.

Ceylon Beverage Holdings Plc (up at 1,600.50), Aitken Spence Plc (up at 130.00) and LB Finance Plc (up at 71.30) were among the top contributors of the day.

There was a net foreign inflow of 63.9 million. (Colombo/May28/2024)

“The rating reflects WindForce’s large exposure to Ceylon Electricity Board (CEB, BB+(1ka)/Stable) as the key offtaker. The Stable Outlook reflects Fitch Ratings’ view that risks of significant payment delays from CEB to WindForce has decreased, easing liquidity pressure,” the company said in a stock exchange filing.

The full Rating Action Commentary by Fitch Ratings Lanka Ltd:

Fitch Publishes Sri Lanka’s WindForce’s ‘BBB+(Ika)’ National Rating; Outlook Stable.

Fitch Ratings – Colombo – 22 May 2024: Fitch Ratings has published Sri Lanka-based independent power producer WindForce PLC’s ‘BBB+(Ika}’ National Long-Term Rating. The Outlook is Stable.

The rating reflects WindForce’s large exposure to Ceylon Electricity Board (CEB, BB+ (Ika)/Stable) as the key offtaker. The Stable Outlook reflects our view that risks of significant payment delays from CEB to WindForce has decreased, easing liquidity pressure. However, Fitch believes medium-term risks to weaker collections of CEB’s dues
remain, and this is subject to the consistent implementation of CEB’s cost-reflective tariff mechanism.

Key rating drivers

Improving Receivables Collection: We expect WindForce’s receivable days to remain at around 80 in next 12 months. This is based on our expectation that CEB will continue to settle its payables, following improvement in its financial profile from cost-reflective tariff revisions. WindForce’s receivable days fell to around 198 days by December 2023, from 348 days at the end of the financial year 31 March 2023 (FY23). The company says it received further payments in 1Q24 that improved its receivables materially.

Weak Counterparty Profile: WindForce’s rating is constrained by the weak credit profile of its key offtaker CEB, the sole electricity transmitter and distributor in Sri Lanka, despite CEB’s improved financial performance. CEB’s rating is ultimately contingent upon support from the Sri Lankan sovereign (Long-Term Local-Currency Issuer Default Rating (IDR): CCC-; Long-Term Foreign-Currency IDR: Restricted Default) and its weak credit profile.

WindForce derived an average 80% of its EBIT from CEB in FY23-9MFY 724, with balance coming from its Ugandan operations. We expect WindForce’s cash flow exposure to CEB to increase further in FY25-FY27 with the commissioning of a 1OMW solar project in Kebithigollewa and a 1OOMW solar power plant in Hambantota in Sri Lanka.

Risks to Cost-Reflective Tariffs: Fitch believes there are risks to consistent implementation of cost-reflective tariffs, affecting the credit profile of domestic power generation companies. This is because of the government’s competing priorities: managing inflation, CEB’s financial health and the state’s own finances. We have assumed WindForce’s receivables days will deteriorate to 100 by FY27 as a result, but a longer record of consistent implementation could support a moderation of these risks.

The Sri Lankan government has implemented a cost-reflective tariff mechanism since mid-2022, to ensure CEB’s operating costs and interest obligations are covered. The new mechanism supports break-even operating cash flow for CEB, as of its latest financial year. This has enabled CEB to clear part of its overdue payments to trade creditors over the past 12 months. The tariff regulator – the Public Utilities Commission of Sri Lanka – approved lower tariffs by an average of 21.9% in its March 2024 review, which is a greater decrease than CEB’s proposal, reflecting the risks.

Investments Weigh on Free Cashflow: We estimate negative free cash flow (FCF) in FY25-FY27, due mainly to high capex and investments. This is despite improving operating cash flow from a shorter working capital cycle and newly commissioned projects. WindForce expects to invest USD12 million for the 30% stake in a LOOMW solar project in Hambantota in FY25-FY27.

Moderate Leverage; Adequate Coverage: We forecast WindForce’s EBITDA net leverage to rise to 2.5x in FY25 (QMFY24: 2.0x) and 4.2x in FY26 on higher capex. However, interest coverage should strengthen to 3.7x in FY25 (9YMFY24: 3.1x) due to falling domestic interest rates even as debt increases. Sri Lanka’s monthly Average Weighted Prime Lending Rate fell to 10% by end-April 2024, from the peak of 28% in December 2022. Around 70% of
WindForce’s loans carried variable rates as of end-2023.

Steady EBITDA Margin: We expect the EBITDA margin to remain around 70% in FY25-FY27. WindForce’s power purchase agreements (PPA) offer long-term cash flow visibility, with a weighted-average remaining contract life of around 12 years, but production volume is affected by seasonal and climatic patterns. This is mitigated by its diversified portfolio, comprising wind (74MW), solar (38MW) and hydro (15MW) power plants, totalling to 127MW excluding associates and joint ventures.

Derivation Summary

WindForce is rated two notches below domestic power producer and engineering, procurement and construction contractor Lakdhanavi Limited (‘‘A(Ika)/Stable). The difference is on account of Lakdhanavi’s larger operating scale, and geographic and business diversification.

Both Lakdhanavi and WindForce have significant exposure to CEB. However, Lakdhanavi has operations and maintenance (O&M) services, manufactures transformers and switchgears, and offers galvanizing services. We also believe CEB is likely to prioritise payments to Lakdhanavi in a stress scenario, given Lakdhanavi provides O&M services to one of Sri Lanka’s largest power plants, and is investing in a large liquefied natural gas power plant, both of which are critical to CEB’s future strategy.

Resus Energy PLC (BBB(Ika)/Stable), a domestic power producer, is rated one notch below WindForce. WindForce’s higher rating is driven by a comparatively better liquidity position with sufficient cash flow to cover near-term maturities and better diversification in power generation sources and geographies.

Vidullanka PLC (A+(Ika)/Stable) is a renewable power producer with operations in Sri Lanka (35MW) and Uganda (13MW). WindForce is rated three notches below Vidullanka, despite the latter’s smaller scale. Vidullanka has lower counterparty risk and lower exposure to CEB, as 80% of its EBIT came from its Uganda projects in FY23.

Key assumptions

Fitch’s Key Assumptions Within the Rating Case for WindForce:

– Revenue to increase by 14% in FY25, mainly driven by commissioning of 1OMW Kebithigollewa power plant and 15MW Hiruras power plant’s first full year of operation;

– EBITDA margin of around 70% in FY25 and FY26;

– Receivable days at 80 in FY25;

– Capex of LKR2.5 billion in FY25 and LKR6.0 billion in FY26;

– Investments of around LKR2.0 billion a year in FY25 and FY26 in associate companies;

– Dividend payout of 80% of prior year profit.

Rating sensitivities

Factors that could, individually or collectively, lead to positive rating action/upgrade

-A sustained and substantial reduction in counterparty risk, as reflected in a significant improvement in CEB’s credit profile.

Factors that could, individually or collectively, lead to negative rating action/downgrade

-Deterioration in liquidity, including due to delayed receivables collection or challenges in refinancing;

-EBITDA net leverage above 5.5x for a sustained period;

-EBITDA interest coverage below 1.5x for a sustained period.

Liquidity and debt structure

Liquidity Subject to Counterparty Health: WindForce’s liquidity is subject to timely collections of dues from CEB. It had around LKR2.9 billion readily available cash and cash equivalents as of end-2023, with around LKR6.3 billion of unused but uncommitted credit lines from domestic banks, against LKR2.2 billion of debt maturing in the next 12 months. Maturing debt mainly comprises the current portion of long-term debt obtained to fund the investments in its power plants.

We expect the company to generate negative FCF in the near-to-medium term due to high capex. However, WindForce has adequate access to domestic banks, as most banks are willing to provide longer-tenured facilities for the company’s operating power plants that have more than 10 years remaining under their PPAs.

Issuer profile

WindForce is a leading renewable power producer in Sri Lanka, with total installed power generation capacity of about 163MW (including its share of associates and joint ventures) as of end-March 2024.