COCO LANKA LOOKING FOR RS 360 M.N. ZERO COST CASH

10/01/2009 - Coco Lanka PLC, a member of the Renuka group (not the Renuka Hotel group of Mr. Ravi Thambiayah) is seeking Rs.360 million zero cost capital through a rights issue to be utilized for settlement of related company borrowings and investment in agriculture and food and beverage ventures with the context of what the company called "the post war opportunities in Sri Lanka."

Coco Lanka currently owes three related companies - Renuka Agro Exports Limited (Rs.30 million), Renuka Enterprise (Pvt) Limited (Rs.20 million) and Renuka Foods Limited (Rs.25 million) a total of Rs.75 million borrowed interest free.

The Renuka group recently successfully raised equity capital through Renuka Agro Limited with the public issue heavily oversubscribed. The share is now quoted on the Diri Savi board of the CSE and has been heavily traded at above the issue price of Rs.2.25 per share from Jan. 4.

A circular issued to shareholders of Coco Lanka said that once these borrowings are settled, a balance of Rs.285 million proposed to be raised through the rights issue approved in principle by the CSE, will be invested in agriculture and food and beverage ventures.

The rights issue involves nine million new ordinary voting shares priced at Rs.35 each to be issued to existing shareholders of Coco Lanka in the proportion of 05 for 07 and 1.8 million new non-voting shares priced at Rs.25 each on the proportion of 01 ordinary non-voting share for every 07 ordinary voting shares in the company.

Shareholders have been told that in the opinion of the board of directors of the company the issue price of both voting and non-voting shares "are fair and reasonable to the company and all its existing shareholders."

Coco Lanka which was floated in 1990 as a private company and listed on the CSE in June 1994 is today an investment holding company for agriculture and food and beverage ventures.

The subsidiaries are engaged in the manufacture and export of coconut products, organic products and value added teas. The circular claimed that Renuka Agri Foods are the owners of the "most diversified coconut factory in the country."

The four subsidiaries of the company are Renuka Agri Foods, Renuka Organics, Renuka Teas and Ceylon Forestry with Renuka Agri Foods, a BOI approved company, having a British strategic investor.

Similarly Renuka Organics is a joint venture with a Netherlands based company which through subsidiaries cultivate, manufacture and export organic products – canned fruit, fruit relish, fresh beverages and coconut oil.

Renuka Teas is focused on black, green, flavoured and herbal teas in tea bags and specialty packaging while Ceylon Forestry, a joint venture with British partners, was established last year to enter the forestry industry.

This company has a teak, broad leaf mahogany and khaya plantation at Matale.

The share issue is not underwritten and in the event of under-subscription, the company said it would utilize subscriptions up to Rs.75 million to settle related company borrowings and invest the balance, if any, in agriculture and food and beverage ventures.

source - www.sundayisland.lk