Cash-rich CT Group rationalises investments, Exits industrial goods and ceramics

There was no word up to yesterday on how Ceylon Theatres Holdings PLC will do with nearly Rs. 3 billion cash raised by the sale of its ceramics cluster including Horana plantations but analysts believed that of the cash may be distributed to shareholders and the balance utilized for property acquisition.

"About five years ago, the Dhammika Perera interests made an unsuccessful bid for the ceramic companies they now control but that failed and shares bought on the market were sold to the Ceylon Theatres group,’’ an analyst said. ``The acquisition makes a great deal of sense for Royal Ceramics (RCL) and Dhammika.’’

Mr. Nimal Perera, Dhammika’s financial advisor, speaking from Dubai said on Friday that they made a capital gain of about Rs. 150 million on their bid to buy the Lanka Ceramics group some years ago.

"This acquisition brings many synergies on procurement, supplies, showrooms and much more to our group. We can display our bath and sanitaryware in their showrooms. We didn’t have a wall tile company which we now have. There are a lot of advantages,’’ he said.

Asked whether RCL, part funding the acquisition on debt, could continue to pay dividends to its shareholders, Perera said: ``We’re a company making nearly Rs. 2 billion a year. We can service dividends.’’

He noted that with the latest acquisition, the Dhammika Perera interests control 28 listed companies.

Analysts also noted that CT Holdings Chairman Anthony Page, who will remain chairman of the acquired cluster, acted in concert with the buyers.

Horana Plantations with a substantial rubber portfolio that was one of the acquired companies will offer synergies to the Hayleys group controlled by Dhammika Perera, an analyst said.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=78793

Lanka Ceramic Bldg Will House Cargills Agri Bank

By Paneetha Ameresekere
Market turnover on Monday hit the Rs 4.1 billion mark, helped largely by a Rs 3 billion contribution by companies controlled by business magnate Dhammika Perera which took an 80% stake in Lanka Ceramic plc, an entity which prior to this acquisition was held by the Pages of Cargills supermarkets fame.

The Page family had control over Lanka Ceramics through the Ceylon Theatres (CT) Group, which is believed to have made a capital gain of Rs 1 billion from this sale. Another company controlled by the Page family is the Cargills Group.

Though both, i.e. the CT Group and the Cargills Group, are Page family owned companies, they are however run as separate entities, persons in the know told this reporter.

The sources further said that the physical property in the form of Lanka Ceramics head office in Colombo is however controlled by the Cargills Group which also holds the KFC franchise in Sri Lanka.

Through a buyback arrangement Cargills will take full control of this building which will house an agri-bank, for which the Cargills Group has obtained a Central Bank license, they said.

That building will not belong to Perera, the sources said.

The CT Group currently controls Empire City, a luxury condominium complex which formerly housed the Empire
Theatre, whilst going into another luxury property development with a Singaporean company, at a site overlooking the Colombo Port.

Additionally the Regal Theatre in Colombo and a stock broking company too come under the CT Group umbrella. Another company controlled by the Pages is the Millers Group.

Meanwhile, among Lanka Ceramic’s subsidiaries are Lanka Wall Tiles, Lanka Tiles and a plantation company.
http://www.thesundayleader.lk/2013/05/12/pages-make-rs-1-bn-profit-in-lanka-ceramic-sale/

Ceylon Theatres Holding (CTH) Group, a Sri Lankan holding company and investment arm of several businesses, is undergoing a process of rationalisation and ‘sustainable’ value creation.

In one of the most significant business transactions in recent times, the group – involved in the food and beverage sector, consumer goods, retail marketing, property including real estate and condominium development and the financial sector with the Cargills Agriculture and Commercial Bank, disposed of its interests in the industrial goods and plantations sector with the sale of subsidiary Lanka Ceramics.

“The group now has a cash surplus of Rs 5 billion and these funds would partly go towards strengthening the cash reserve, for strategic investments and in consolidating our businesses,” said CTH Managing Director Ranjit Page.

Sitting down for an interview in Colombo this week after the sale of Lanka Ceramics, Mr. Page said, “the transaction overall made good business sense, we got a fair return and the sale hasn’t had any impact on the share price of CTH.”On Tuesday, CTH sold a majority stake in Lanka Ceramics to Royal Ceramics controlled by entrepreneur Dhammika Perera in a deal aided by his close associate Nimal Perera. The near 3-billion rupee transaction was another conquest by the duo, making waves in Colombo’s corporate circles for the past few years. Their acquisitions include control of Hayleys and Delmege Forsyth.

Mr. Page, driver of the tremendous growth at CTH subsidiary Cargills, spoke on a range of issues saying the reason for exiting from Lanka Ceramics was because the group is looking at synergies with existing businesses and shareholder value creation. “We also look at the value of our subsidiaries, and how this value is reflected in the ultimate holding company, CTH,” he said adding that “our objective in each of these businesses is to aggressively grow and lead the industry”.

CTH’s new cash flow of Rs 5 billion includes Rs. 2 billion raised last year from funds generated from a rights issue for its new bank and other investments. In March, World Bank affiliate International Finance Corporation and Germany’s DEG – Deutsche Investitions took a 10 per cent stake, each in the new bank. Mr. Page said the foreign investment component in the bank has risen to 30 per cent and sought to explain that the full requirement of capital for the bank has already been raised without any issues. “CTH had a private placement and rights issue in 2011 for all its investments and our investment has already been infused into the bank. The interest in subscribing for the bank’s shares was substantially above the capital requirement”, he said, adding that IFC and DEG coming in meant all the proceeds from this sale plus stakes taken by top corporates in the bank saw enough money being raised.

In the case of Lanka Ceramics, the group received some offers from overseas but felt that the brands ‘Lanka Ceramics’, ‘Lanka Tiles’, etc should be retained by a local player who could grow the industry and the business for the benefit of all shareholders and employees. “For CTH, people and their interests are very important.

We wanted to ensure their security and growth under the new owners. This is why you can see continuity in certain aspects of this transaction,” he said.

Responding to questions on Cargills debt burden, Mr. Page said the debt at Cargills has been capped and will reduce over the next two years. Improvement of cash flow would arise from the roll out of new products, enhanced market share and improved returns from new ventures.

On the property sector, the group has a sizable land bank of some 10 acres in and around Colombo, some of which are yet to be utilized. He said the ‘Empire’ continues to be the benchmark for super-luxury apartments in the country while the gated community project in Piliyandala continues to receive a very positive response from clients.

The group is also planning to open a shopping mall in Jaffna within the next quarter. “Overall we are in a strong position. To raise the bar in our property interests, we have partnered Keppel, a regional leader in the property development industry, and a multi-storey residential development in Kotahena would be the first project in this relationship. In the future we may look to align with strategic partners that share our vision and scope in other business sectors as well.” he added.
http://www.sundaytimes.lk/130512/business-times/cash-rich-ct-group-rationalises-investments-43643.html