brand logo

Takeover of F&G Property Developers imminent

08 Nov 2021

  • Authorised share capital increased on 2 Nov.
  • Shares issue to be approved on 9 Nov.
By Shenal Fernando The Independent Association of Depositors of F&G Property Developers (Pvt.) Ltd. and Real Estate Co. Ltd. expects the shareholders of F&G Property Developers to approve the resolution to issue shares to the new investor, ZRA Holdings, on 9 November, paving the way for the takeover of the F&G Group of Companies. Speaking to The Morning Business, Independent Association of Depositors of F&G Property Developers and Real Estate Co. President C. Caldera claimed: “During the last meeting on 2 November, the shareholders of F&G Property Developers approved the resolution to increase the authorised share capital of the company. However, due to certain issues with regard to the two bank drafts provided by Sarath Subasinghe of ZRA Holdings, in lieu of the Rs. 500 million initial investment under the agreement, the resolution for the issue of shares under the agreement was postponed until 9 November. Once Subasinghe presents the duly amended bank drafts, the relevant shares will be issued to him, whereupon he will complete the takeover of the company.” Explaining further, Caldera held that while the resolution to increase the authorised share capital of F&G Property Developers was approved on 2 November, the former directors had refused to allow the resolution for the issuance of shares to be passed on the ground that the two bank drafts presented by Subasinghe were not issued towards bank accounts maintained by F&G Property Developers. Accordingly, they had required Subasinghe to amend the relevant bank drafts and present them on 9 November, whereupon the relevant share issue can be approved. Previously, controversy arose when reports emerged that F&G Property Developers (Pvt.) Ltd. shareholders Lalith Kothalawela, K.A.S.Jayasinghe, Mervyn Jayasinghe, and Malani Sabharutnam had refrained from granting their acknowledgement for the issuance of shares during the extraordinary general meeting (EGM) held on 30 July 2021, 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 was set to be held on 2 November. However, Caldera clarified to us at the time that the shareholders had not opposed the issuance 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. Moreover, Caldera noted that both the association and the new investor were highly optimistic that all shareholders of the company would be present on 2 November and would not oppose the issue of shares. With the fall of Ceylinco in 2008, over 4,700 depositors who had invested in F&G Group of Companies (F&G Real Estate and F&G Property Developers) were at a risk of losing their deposited money which amounted to over Rs. 7 billion. Consequently, the depositors filed a fundamental rights (FR) petition (FR 317/2009) in the hope of recovering their hard-earned money. Consequently, the Supreme Court had sought to identify a suitable potential investor to take over F&G Group of Companies, revamp the operation, and pay back the depositors’ liability. Following protracted deliberations, the Supreme Court had selected ZRA Holdings (Pvt.) Ltd. as its proposal proved to be the most productive and beneficial to depositors. 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. With regard to F&G Real Estate, repayment was to come through 61% in cash via 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 to enter into the investment agreement which was signed on 30 April. Under the agreement, ZRA Holdings was empowered to issue maiden shares in respect of its initial investment of Rs. 500 million within 60 days, following which ZRA Holdings would take over as the majority shareholder of F&G Group of Companies.


More News..