Singaporean consortium in major deal to acquire EAP

By Ishara Gamage and Nishel Fernando

A Singapore-based investment consortium has reached a deal with the Edirisinghe family to buy the troubled ETI Finance Limited and its…related assets – currently under CBSL management – for a maximum amount of US$ 75 million, and is awaiting CBSL’s offer to compete the deal, Ceylon FT learnt.

“We have concluded the discussions with the Edirisinghe family. Though the group’s assets are currently valued at around US$ 55-60 million, we are ready to pay a premium price of up to US$ 75 million depending on CBSL’s offer, so we are now awaiting CBSL’s offer to conclude the deal,” market sources told Ceylon FT.

Meanwhile, CBSL sources told Ceylon FT earlier this week that the CBSL is about to finalize the deal in a much more transparent and legitimate manner.
However, sources said the investment consortium will reveal the details of the fund after completion of the registration process in Singapore.

Lyca Group was also invited to participate in the fund; however, it has yet to respond to the request.
The newly-created Singapore-based investment holding company will be the ultimate buyer of the EAP Group. It includes 7-8 parties in different sectors such as television, film and entertainment, as well as the real-estate and financial sector.
The sources also said that the holding company is managed by an independent management committee, which includes variety of global investors representing the different industries. The company will be a vertical integration of various global entertainment, property, and financial companies, as well as individuals.
“After conclusion of the deal, there will be a possibility to inject Rs 11 billion into the troubled ETI and Swarnamahal Financial Services PLC,” said sources.

According to the Telecommunications Regulatory Commission of Sri Lanka (TRCSL), only 40 per cent of a local television company can be held by a foreign party, while 60 per cent equity needs to be with a local partner. Hence, sources said that even though the ultimate buyer will be a foreign party, they are ready to address the equity ratio issue differently.
Sources also stated that the motives and shareholding structure of the consortium would be announced upon completion of the deal.

CBSL, in January, appointed a panel to manage the affairs of the two companies and their related assets – which comprise over nine subsidiaries – after ETI Finance Limited and Swarnamahal Financial Services PLC ran into severe liquidity issues and CBSL restricted the withdrawal of their maturing deposits for six months.

The two finance companies have combined assets of over Rs 36 billion, with a monthly operating income of Rs 1 billion.