Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
Sri Lanka Equity Forum

Discussion Forum for Stock Market Investors in Sri Lanka

සිංහල පරිවර්තනය
Submit Post
Submit Post

Latest topics

» BFN Price HOLDING ON AS THE DEAL COME CLOSER
by sanjulanka Today at 1:29 pm

» Financial Reports Q-3 2018
by ruwan326 Today at 11:52 am

» Another Finance sector deal UBC UBC UBC Deal
by kalu351 Today at 10:56 am

» BFN BFN BFN BFN BFN DEAL ......WITH CHINESE BANK
by kalu351 Today at 10:54 am

» MARKET RISE - GUARANTEED
by samaritan Today at 10:21 am

» #PM Crisis#
by samaritan Today at 9:41 am

» MARKET CRASH - GUARANTEED
by Maharaja Today at 9:32 am

» ##FUN TOONS###
by ruwan326 Today at 7:43 am

» Q-TO-Q Financial Report-Financial Performance- Period ended 30 September 2018
by ruwan326 Yesterday at 9:00 pm

» Daily Foreign Transactions
by ruwan326 Yesterday at 8:12 pm

» CB raises key rates in surprise move to support currency
by Miss-Sangeetha Yesterday at 4:59 pm

» President rejects NCM brought against PM, Govt.
by ranferdi Yesterday at 2:36 pm

» DIVIDEND ANNOUNCEMENTS- OCT/NOV
by ruwan326 Yesterday at 1:59 pm

» SRI LANKA @ 2020
by ruwan326 Yesterday at 7:21 am

» Supreme Court issues stay order on Gazette dissolving Parliament
by THUWA Wed Nov 14, 2018 5:28 pm

» CSE THIS WEEK
by ruwan326 Wed Nov 14, 2018 8:27 am

» Veterans return to lead state banks
by ruwan326 Wed Nov 14, 2018 8:21 am

» Collect ODEL Range Rs. 23-25 .......Target Price over Rs.35
by soileconomy Tue Nov 13, 2018 8:54 pm

» අනං## මනං ##
by ruwan326 Tue Nov 13, 2018 8:52 pm

» JKH News & Reports
by ruwan326 Tue Nov 13, 2018 8:11 pm

» Survey - Individual Investors' Behaviour and Investment Performance
by eroshans Tue Nov 13, 2018 3:49 pm

» USD/MXN Can Face A Bearish Reversal
by GersonH Mon Nov 12, 2018 10:22 pm

» EURUSD breaks major horizontal support
by GersonH Mon Nov 12, 2018 10:18 pm

» EURCHF is headed south
by GersonH Mon Nov 12, 2018 10:14 pm

» EURUSD: the pair is close to the lower boundary of the B-B channel
by GersonH Mon Nov 12, 2018 10:12 pm

» Parliament dissolved from midnight ????????
by Yahapalanaya Mon Nov 12, 2018 6:24 pm

» JKH 1:20 Buy back trick.
by ranferdi Mon Nov 12, 2018 11:19 am

» Bitcoin Cash especially has a high chance
by GersonH Mon Nov 12, 2018 8:19 am

» USDCHF pivot point is at a level of 1.0095
by GersonH Mon Nov 12, 2018 8:17 am

» EURUSD: breakout of the upwards channel
by GersonH Mon Nov 12, 2018 8:15 am

You are not connected. Please login or register

Sri Lanka Equity Forum » Stock Market Talk » Background on recently concluded DIST restructure

Background on recently concluded DIST restructure

Go down  Message [Page 1 of 1]

Melstacorp Ltd

avatar
Stock Analytic
Stock Analytic
Hi all

Back after a long time. Thanks to the overwhelming support of the shareholders the restructure of DCSL PLC was completed. The last step was listing of DCSL PLC which now is a pure liqour company. There was a long delay of listing DCSL from the swap that took place in Last quarter of 2016. At the time of getting the balance sheets of MELS and DIST ready for the swap a due of Rs. 20 billion was created in DIST books. This was done as at the time of the application for the swap a company needed a 20% public float. Also it was the intention of the boards to do a SPO (Secondary Public Offer) at DIST level. The plans changed as there was a huge dip of the profitability of DIST. This was as the Govt re-introduced VAT for liqour along with massive increase in import duty on ethanol and also a customary excise duty increase, all done in one go. The Company was not in a position to pass the entire increase of costs to the customers in one go. Hence the profitability of DIST dropped. 

Thereafter the company changed plans and wanted to do a sell down at MELS level. To do this the gap of Rs. 20 billion created in DIST had to be covered. This required a private placement. It took sometime to obtain SEC approval for the private placement. Based on financials (due to the dip in profitability as explained before, this was done at 12.50 a share) After the private placement through a capital reduction (which also has a 60 day public notice period) the gap of Rs. 20 billion was closed. This was completed in February 2018.

After November 2017 the profitability of the DIST was restored by adjusting the prices. Then MELS sought approval of the SEC to sell down in the market rather than selling on a prospectus. This as the Company was not in a position to sell above the private placement price of Rs. 12.50, although at the new level of profitability it was worth more. The Company thought it is unfair by the MELS shareholders to sell an investment much below it's value. Hence the request for approval to sell down in the market. This required the lifting of the suspension placed on the trading of DIST. The Company was on the view as the suspension placed was on the request of the Company, it should be lifted enabling the company to sell down DIST. SEC was not willing to approve the lifting of the suspension without the public float been restored. 

Therefore MELS decided to give 7.5% of DIST by way of a dividend, as although MELS loses the opportunity to raise funds by selling, it is the most reasonable method for the shareholders of MELS. Although at current level of market capitalization DIST only needs a public float of 7.5%  as it was given as a dividend the shares held by Mliford Exports and LMF are not considered as shares held by public. Hence MELS will have to divest further 4% to comply with the minimum public holding requirement. 

This is mostly for academic interest. If you have any specific questions, I would be happy to answer.

Thank you

Melstacorp PLC

http://www.melsta.com

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum