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13 November, 2012 06:40 AM Source: Financial Times - Sri Lanka

In a major development, Taprobane Holdings Plc and Environmental Resources Investment Plc yesterday announced cross deals worth Rs. 3.7 billion subject to shareholder approval at a hurriedly-convened EGM.

Taprobane Holdings Plc (THL) said it was selling a 20% stake in Browns Investment Plc (BIL) for Rs. 2.04 billion to ERI. THL will also buy a 28% stake in ERI from Lionhart Investments for Rs. 1.68 billion.

An EGM of THL has been convened on Friday to get shareholder approval. Usually for an EGM a 15-day notice is required but a shorter period is possible if the 95% of the shareholding has given consent for same.

The sale of the 20% stake (372 million shares) in BIL is at Rs. 5.50 each and includes 353 million shares held by THL and a further 19 million held by related party Lexinton Holdings Plc.

The purchase of a 28.9% stake (101 million shares) in ERI by THL from Lionhart is at Rs. 16.70 per share.

Lionhart is the single largest shareholder in ERI though it has reduced its stake considerably. Analysts estimate Lionhart’s current stake in ERI to be around 45% from an original 95%.

Caledonian Securities Ltd. had picked up the bulk of the ERI stake and is estimated to own around 25%. Brokers to Caledonian Capital Trust Securities on 23 October disclosed that its client was holding a 13% stake. Since then additional stakes of ERI had been collected including last Friday.

ERI said the purchase of a 20% stake in BIL is being made as a “strategic investment” though THL didn’t specify any particular reason though likely to be same.

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