LCEY gets loan from KOTA

cse.alpha · 1 LCEY gets loan from KOTA Tue Apr 05, 2011 4:42 pm

cse.alpha

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LCEY gets loan from KOTA

http://www.cse.lk/cmt/upload_cse_announcements/4981301993698_.pdf

LCEY has got Rs 300 million loan from its subsidiary KOTA @ 9% p.a. for five years.

Is this really in the best interest of KOTA ?

innam · 2 Re: LCEY gets loan from KOTA Tue Apr 05, 2011 4:48 pm

innam

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Of course it's not in the best interests of the minority shareholders of KOTA.
Unfortunately this is what happens within family owned groups (LCEY/CFLB especially has a tendency to milk the subsidiaries with continous rights issues).
Just imagine if this 300 million was handed out to KOTA shareholders as a dividend, they would have received 270 million after taxes and probably earned 20-30% annual returns investing in the market....because of the self serving behavior of the management they will now earn around 6% (after taxes) on this loan.
Great deal for LCEY getting a loan at 9% for 5 years but a really rotten deal for KOTA shareholders.

Last edited by innam on Tue Apr 05, 2011 4:49 pm; edited 1 time in total (Reason for editing : spelling error)