Vanik to focus on fee based business

By Hiran H.Senewiratne

Vanik Incorporation Ltd, the company that involves in the total financial services business is now planning to move away from funds based activity business to fee based business as a part of its restructuring plan.

At present, a law suit is pending before the Court of Appeal on the company’s restructuring plan. Before that a District Court order was given to wind up the company, which was filed by Ruhunu Development Bank five years ago when it was facing a financial crisis.

"We are quite positive that court order will be delivered in our favour, for us to implement the restructuring proposal, its President/ Chief Executive Officer Justin Meegoda told the Financial Review.He said, if the court order is delivered in favour of them they could implement the restructuring proposal in three to four months. Under the restructuring plan 50 per cent of its debt will be converted into equity and the balance to be paid in three years. At present the company’s total liability is running into Rs11 billion including the cumulative interest.

Ruhunu Development Bank now the Regional Development Bank filed a case before the District Court to recover Rs 90 million worth of deposits, when the company was facing a financial crisis, he said.

At present the company has paid 80 percent of their deposit money and the balance money to be paid once the restructuring proposal is being implemented, while only Rs 3-4 million will be left to be paid for individual shareholders, Meegoda said.

According to Meegoda the company does not have any assets with them as they disposed all of their assets including a 240 perches land in Colpetty pay off debt

"We want to focus on fee based business including insurance brokering, financial consultation, and company feasibility studies and many more. Since the tourism sector is a good future, they intend to get into that business as well, he said.

The court hearing on this company will be held on January 24 and will be filing relevant submission on that day. If we get the court order in our favour only the company could implement or roles out the restructuring plan within two to three months following the court order, he said.

Currently, major shareholders of the company are Vanik (5.5 million shares), Capital Reach Holding Limited (one million shares), and Capital Reach Credit Limited (2.2 million shares), while they hold more than 8.5 million shares of the company.

While the number of ordinary shares holders runs into 22,000, where they hold 70 million worth of shares of the company, Meegoda added.

At present the company has subsidiaries namely Vinketh teak plantation company, Vanik Insurance Brokers , Tour East (Lanka) Ltd and Sebrof Limited.

source - www.island.lk