ACAP negotiate funding to avert crisis

By Santhush Fernando

Asia Capital PLC, once a fully-fledged financial services group, is currently negotiating finance facilities to avert a possible cash crunch crisis.
In the Asia Capital’s latest financial statement ending March 31, 2008, the company and group are said to be in the process of negotiating finance facilities. Company and Group have incurred a net loss of Rs. 522 mn, and Rs. 371 mn respectively while accumulated losses for the two entities were Rs.654 and 636 m. respectively. “The going concern of its subsidiary companies - Asia Growth Fund 1 (Pvt) Ltd. and Investor Access Asia Limited are in doubt, but the financial statements of the subsidiaries have been prepared on the assumption that they are going concerns as the directors are confident that the financial position will improve in the near future, and the parent company has agreed to provide financial support,” report said.
Financial statement of Asia Couture Ltd, a fully-owned subsidiary of the company, which was disposed during the year, has not been audited for the current period and previous years.
Asia Capital’s subsidiaries also include Asia Securities (Pvt) Ltd, Asia Fort Sri Lanka Direct Investment Fund Ltd, and Asia Apparel Trading (Pvt) Limited.
Asia Capital PLC has committed to invest Rs.200m. in the shares of Asia Asset Finance Limited through rights with calls of Rs.50m. on 31 October and 31 December 2009 and Rs. 100 Mn on 31 March 2010. Asia Capital PLC has given an undertaking to Questnet Limited to settle sum of Rs.89Mn on behalf of Asia Securities (Pvt) Limited no later than June 26, 2011.
Net assets of its subsidiary- Asia Asset Finance Limited were less than half of its stated capital and below the Core Capital Requirement stipulated by the Central Bank of Sri Lanka (CBSL). As per CBSL’s letter dated May 16, 2008, had reminded that the extension period to enhance the Core Capital to Rs.200m ended July 31, 2008 and requested to forward the plans to be adopted by the management of the company to comply with the Core Capital requirement. Accordingly, the board of directors of the company had made written representation to the Director, Department of Supervision of Non Banking Financial Institutions.
However, as per the financial statements as at March 31, 2008 Core Capital is Rs. 40m. and the company has not achieved the core capital
of Rs.200m as at July 31, 2008. Further, Asia Capital PLC has committed to invest Rs.200m in shares of Asia Asset Finance Limited through rights issue. Parent Company twice invested Rs. 50 Mn each in October 2009 and in December 2009 and a further Rs.100m to be invested in March 2010.
Asia Capital is a diversified financial services group with operations encompassing investment banking, asset management, stock broking, fixed income securities trading, insurance underwriting, finance house operations (asset leasing, deposit mobilisation) and commodities broking.