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CEB to settle debt using capital raised through debenture issue

12 Apr 2021

  • Debenture issue oversubscribed

  • Applications exceed Rs. 20 b

By Zahida rizvi   The debt-ridden Ceylon Electricity Board (CEB) is expected to settle its colossal sums of debt by utilising the capital it raised in a recent debenture issue, according to CEB Finance Department Head E.K. Liyanage. The issue opened on 8 April and consisted of 100 million debentures with an option to issue up to a further 100 million debentures at the discretion of the CEB in the event of an oversubscription of the initial issue. Last Thursday (8), issuing a statement, the Colombo Stock Exchange (CSE) noted that the issue has received applications for over Rs. 20 billion, thereby announcing that the issue has been oversubscribed. “This is fully owned by the Government’s Treasury and is a vital reason for the oversubscription and confidence placed by the investors for this issue. The debentures carry a rating of AA-(lka) by Fitch Ratings Lanka Ltd., while the CEB is rated as AA-(lka) with a Stable Outlook by the same rating agency,” he stated. The CSE approved the CEB’s application to issue Senior Unsecured Listed Redeemable Rated Debentures at an issue price of Rs. 100, amounting to a potential capital raising of up to Rs. 20 billion. The debentures are issued for a period of five years with a fixed coupon interest rate of 9.35% p.a. (AER 9.35%) to be paid annually. Liyanage further emphasised that the entity opted from the traditional manner of obtaining funds from the banking sector, to a challenging path by being listed in the market as a listed debenture. The CEB struggled with short-term borrowings from banks and other short-term liabilities to the Ceylon Petroleum Corporation (CPC) and independent power producers (IPPs) increasing to Rs. 223.2 billion by the end of 2019 from Rs. 142.2 billion at the end of 2018. The CEB’s long-term outstanding liabilities increased to Rs. 421.7 billion by the end of 2019 from Rs. 392.2 billion recorded at the end of 2018. According to the unaudited provisional financial statements, the CEB recorded a loss of Rs. 85.4 billion before tax in 2019 compared to a loss of Rs. 30.5 billion in 2018. Increased dependence on thermal power due to dry weather conditions that prevailed during the first seven months of 2019 was the main reason for the deterioration of the financial position of the CEB.


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