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Justice in sight for Ceylinco group company depositors

01 Nov 2021

  • F&G Property Developers’ depositors’ 13-year plight likely to end
  • Depositors optimistic of grant of acknowledgment tomorrow
BY Shenal Fernando The Independent Association of Depositors of F&G Property Developers (Pvt.) Ltd. and Real Estate Company Ltd. are hopeful that its 13-year search for justice may be finally reaching its last stretch, as the association is highly optimistic that the acknowledgement of the shareholders of F&G Property Developers (Pvt.) Ltd. will be granted for the issue of shares by ZRA Holdings under the investment agreement with the F&G group of companies. Initially, concerns arose when shareholders, including Lalith Kothalawela, K.A.S. Jayasinghe, Mervyn Jayasinghe, and Malani Sabharutnam, refrained from granting their acknowledgement on the ground that they need time to consider the court order and the investment agreement and proposed to set another date for the meeting which is set to be held tomorrow (2). However, speaking to The Morning Business, Independent Association of Depositors of F&G Property Developers (Pvt.) Ltd. and Real Estate Company Ltd. President C. Caldera claimed: “The shareholders had not opposed the issue of shares, and had merely requested time to consider the content of the court order and the investment agreement, after which they would grant their acknowledgement. We expect all shareholders of the company to be present on 2 November, as the company secretary has informed us that notice has been duly served, and I don’t believe they will oppose this nor do they have a reason to object since they had over 12 years to provide an alternate solution before the court mandated the current solution.” He further added: “We are highly optimistic that all shareholders will grant their acknowledgement and have been informed of such intention by the new investor.” With the fall of Ceylinco in 2008, over 4,700 depositors who had invested in the F&G Group of companies (F&G Real Estate and F&G Property Developers) were at risk to lose their deposited money, which amounted to over Rs. 7 billion. Consequently, the depositors filed a fundamental rights petition (FR 317/2009) in the hope of recovering their hard-earned money. Upon examining the petition, the Supreme Court ordered the appointment of an Interim Board of Directors to manage the assets owned and operated by F&G Real Estate Co. Ltd. and F&G property Developers (Pvt.) Ltd. Chief Justice Shirani Tillakawardhana instructed the Interim Board of F&G to call for an Expression of Interest (EOI) for a potential investor to take over the F&G Group of companies, revamp the operation, and pay back the depositor’s liability. Since none of the EOIs submitted presented an effective plan to pay back the depositor’s liability, the interim board of F&G, under the guidance of the Supreme Court and the Central Bank of Sri Lanka (CBSL), hired KPMG to carry out an evaluation and submit their recommendation to pick an appropriate investor to take over the group. Accordingly, the proposal submitted by ZRA Holdings (Pvt.) Ltd. was selected, as it proved to be the most productive and beneficial to depositors. According to Caldera, the association had played a role in recommending the investor to the courts and that all parties to the proceedings had consented to the appointment of such investor. According to the settlement plan, a payback ratio of 51%of depositor funds was outlined to be paid in cash to depositors of F&G Property Developers while the outstanding 49% was to be met through the granting of non-voting shares. Whereas where F&G real estate was concerned, repayment was to come through 60% in cash through depositor funds while the outstanding 39% was to be settled through the granting of non-voting shares. The Supreme Court, which sanctioned the settlement plan on 24 March 2021, directed the Interim Board and ZRA Holdings (Pvt.) Ltd. to enter the investment agreement, which was signed on 30 April. Under the agreement, ZRA Holdings (Pvt.) Ltd. was empowered to issue maiden shares in respect of its initial investment of Rs. 500 million within 60 days, following which ZRA Holdings (Pvt.) Ltd. would take over as the major shareholder of the F&G group of companies.


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