LOLC's Securitisation - a great success

In 1955 LOLC effected the first Securitisation of lease receivables done in this country. It was, in fact, the first such securitisation done on the whole sub-continent. It was done with the help of the IFC who were the structuring advisors. The Trustees were Jaycee & Company and the banks involved were Deutsche Bank and the Bank of Ceylon.

Four Year Asset backed Notes were issued to the tune of Rs. 366 million at an interest rate of 17.5% which was payable quarterly. The capital was to be repaid at the end of four yeas (in November 1999). The security for the Notes was vehicle leases which were mortgaged to the Trustees. The Notes were issued by a 'Special Purpose Vehicle' a company, LOLC Funding One Ltd., which was specially incorporated for this purpose. This was one of the unique features of this Securitisation. The lease pool that had been mortgaged had been "Strests Tested" to ensure that it was more than adequate to generate funds to meet the quarterly payments and the bullet capital repayment at the end of four years. In order to further safeguard the investors a Sinking Fund was established with Deutsche Bank to build up the funds to meet the interest payments and capital repayment.

LOLC is happy to inform all the investors (ETF and the National Savings Bank were two of the largest) that the Sinking Fund has already (15 months in advance) been built up sufficiently to meet all the payments of interest and capital. Thus, the very first Securitisation of Lease Receivables done in this country has been an unqualified success. LOLC which has pioneered a number of financial innovations (the first listed debenture guaranteed by five banks including the IFC, the first Zero Coupon Bond, the first Interest Rate Swap, the first Factoring Company were among them) is now in a position to repeat the Securitisation which it first did in 1995. It called for so much expertise and specialised software that no one has been able to do it, before or since.

Alpha raises stake in Sri Lanka duty free shop

Alpha Airports Group Plc increased its investment in Sri Lanka duty Orient Lanka Ltd. by 37 per cent, the Public Enterprise Reform Commission (PERC) said.

Alpha Airports, the UK-based multinational which paid 740 million rupees for the 37 per cent, first invested in Orient Lanka in May 1996 by buying a 60 per cent stake for one billion rupees when the enterprise was privatised by selling control to a strategic investor.

The 1996 privatisation agreement between Alpha and the Government of Sri Lanka included a put option under the Sale & Purchase Agreement, whereby the Government would sell the balance shares and the investor would purchase them at an agreed price.

Under the put option Alpha Airports paid 666.66 rupees a share for the 37 per cent stake on August 28, said PERC, the Government's privatisation arm.

"The option price is based on a clause in the agreement whereby the investor agreed to purchase the shares at an agreed price, with a premium of 10 percent per annum", said Mano Tittawella, Director General of PERC.

As the option was exercised in the second year the Government was able to realise a 20 per cent premium on the original price of 555.55 rupees per 10-rupee share paid by Alpha Airports for 60 per cent of Orient Lanka's issued share capital of three million shares.

Shares amounting to three percent of the issued capital were gifted to employees in October 1996.

Alpha Airports is a reputed multinational operating in Europe, USA and Australia through its main division of Alpha Retail, Alpha Flight Services and Dynair.

Orient Lanka, which operates a duty free shop at Bandaranaike International Airport, has the sole concession to market liquor, tobacco, confectionery and fragrances for a period of 10 years.

The Central Bank's Spot Rates for transactions with Commercial Banks announced on the morning of September 08, 1998 were as follows:

The approximate middle exchange rates of following currencies calculated on the basis of cross rates quoted by Gulf International Bank, Bahrain as it appeared in Reuters Financial Information System on September 08, 1998 were as follows:

Average rates at which the following currencies were quoted by Commercial Banks in Colombo for Telegraphic Transfers at mid-day on September 08, 1998 were as follows:

Average Weighted Prime Lending Rate (AWRP) and Lowest Prime Rate (LPR)
The Average Weighted Prime Lending Rate (AWPR) during the week ended September 04, 1998 was 14.8 per cent for all banks. The Lowest Prime Rate among banks during this week was 12.3 per cent.

Average Weighted Deposit Rate of Commercial Banks (AWDR)
The Average Weighted Deposit Rate (AWDR) of Commercial Banks for the month ended June 31st, 1998 was 9.6 percent.