Tuesday, 16 April 2019 07:01

An investor comes out of the blue to take over failed F&G companies

Five groups depositors who stepped into represent disgruntled Depositors of the defunct Ceylinco F&G Group of companies (F&G Real Estate and F&G Property Developers) have taken those affected persons a ride for almost ten years.

With the blessings of the fifth group of depositors headed by one Upali Rajapaksha,a fly by night investor currently managing five failed Ceylinco subsidiaries after taking over its ownership without much public ity is now trying to grab the F&G Real Estate and F&G Property Developers linking up with shadow company without an office.

Using the political power of the ousted leaders of the previous regime, this investor is trying to take over the asset rich F&G companies pushing the depositors from frying pan to fire.

The Central Banka has submitted its observations to the Supreme Court high lighting their concerns on the eligibility of the joint venture investor who even failed to submit original or certified copies of relevant documents pertaining to the deal.

The joint venture investor has been directed to submit original documents or certified copies to prove their availability and credibility of funds and clarify their position with regard to observations made by the CB.The Supreme Court will take up the case for hearing on May 2.

CB has no involvement in the transaction or the selection of the investor as the F&G Board of Directors has been vested with the task of calling for Expression of Interests (EOI), informed sources said.

F&G Board of directors have called for an EOI in October 20 2017 for the revival of F&G Group of Companies and four investors have sent their expression of interest by way of investment proposal and the settlement plan as per the CB guidelines.

A third party company called “ZRA Holdings has been recommended to take over failed F&G companies as per KPMG’s final report dated September 26 2018 .

ZRA Holdings partnered with NLH Holdings to acquire the two companies by collectively showing their proof of funds to invest and revamp the said entities.

The Central Bank (CB) in its report to the Supreme Court noted that even though, the joint venture of ZRA holdings and NLH Holdings (Pvt) Ltd , has planned to infuse an additional new capital of Rs.500 million within first 12 months, no information has been provided to prove such arrangement.

As per the repayment proposal of ZRA, depositors of FGPDL and FGRECL will receive a minimum of 5l percent 'and 6l percent respectively on their principle outstanding deposits.

However ZRA has proposed to pay 20, 30 and 50 percent of those repayments in 03 tranches in two years, accordingly the first 2 tranches will be paid in year 0l and the final tranche in year 02.

The initial investment proposed in the plan is not sufficient even to pay tranche 0l to the depositors of the two defunct companies which is Rs.642.79 million , Central Bank report revealed.

ZRA expects to utilize the initial investment of Rs.500 million to recommence the business and repayments are expected to commence from the income generated from the revival of business, Central Bank observed.

The title of NLH has been reported as NLH Holdings (Pvt) Ltd, NLH Holdings, NLH Holdings Co. Ltd and NLH Holdings Ltd in the documents submitted to CB which raises a concern on whether this is the same company or not.

Plan for further capital infusion has not been specified in the proposal and CB concluded that it is not in a position to comment on the draft Investment Agreement due to those reasons and other factors.

Central Bank is of the view that the investment agreement could be approved after addressing the concerns raised in this report.

It has been revealed that ZRA Holdings has incorporated in March 2018 and currently not in operation.

However, when some depositors conducted a background check of ZRA Holdings surprisingly they could only find a bare land in their business registered address (163, Muhandiram Road , Colombo 3).

Depositors urged Central Bank to track down on present status of four of the Ceylinco companies including, NLH Holdings Pvt Ltd, Nations Building Society Ltd, Ceyhomes Credit & Investments Pvt Ltd and Ceylinco Prosperity Pvt Ltd., which were acquired by the same investor eying to acquire the defunct F&G companies with rich in assets.


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