Business magnate Harry Jayawardena controlled Distilleries group recently in a disclosure to Colombo Stock Exchange (CSE) and in a circular to shareholders said that the group’s major holding company Distilleries Company of Sri Lanka (DCSL) will be brought under the Melstacorp. Accordingly, the ‘Melsta’ will be the ultimate parent of the DCSL and the flagship brand of the group along with a new listing of Melstacorp as an introduction to CSE.
The circular said that the new restructuring of the group’s ownership switch will be done by an ‘Arrangement’ according to the Part X of the Companies Act No. 07 of 2007 via a reorganization of the shares and the stated capital of a company. The document stated that the arrangement will be done via a reorganisation of the Shares and Stated Capital of DCSL and its fully-owned subsidiary Melstacorp Ltd.
Upon the completion of the reorganisation, which requires the approval of the shareholders of DCSL PLC, the shareholders of DCSL will be allotted shares in Melstacorp, in the proportion of four Melstacorp shares in exchange for every one share they now hold in DCSL. Distilleries (DCSL) has 300 million shares in issue with a stated capital of Rs. 300 million and a shareholder base of 10,622 shareholders where Public Holding is 42.44% as at 30th June 2016. After the reorganization DCSL PLC will become a fully-owned subsidiary of Melstacorp and the current shareholders of DCSL shall own shares in Melstacorp and through Melstacorp all the subsidiaries in the Group including that of DCSL.
Hence the group will issue fresh DCSL Plc shares to the public with a preferential allotment to the shareholders of Melstacorp over third party applicants. This will restore the public float of the company. Upon such issue the major shares holder of DCSL Plc will continue to be Melstacorp Limited. The statement added that 1.2 billion voting ordinary shares of Melstacorp will be issued for existing DCSL shareholders and that 1,000 shares of Melstacorp currently owned by DCSL will be immediately converted to Non-voting ordinary shares held by DCSL.
The company said that until 1995 DCSL PLC was a liquor-producing company listed on the CSE. Since 1995 DCSL PLC had made several investments in various diversified sectors of the Sri Lankan economy such as Insurance, Telecommunications, Logistics, Leasing, Fabric Manufacture, Leisure, Information Technology, Hydropower and BPO Services.
Clarifying on the re-switching of the Distilleries to Melsta the statement added that although the nature of the business of DCSL changed from a ‘liquor’ company into a diversified holding company, the name of the holding company remained unchanged and the company however could not extend the name ‘distilleries’ to such investee companies as it is descriptive of the ‘liquor’ industry.
The statement further notes that with the introduction of the National Authority on Tobacco and Alcohol Act No.27 of 2006, using DCSL as a corporate brand became illegal although it was the abbreviated form of the holding company’s name. As such, DCSL PLC decided to introduce a Group brand name that it could use amongst the group companies without violating the said National Authority on Tobacco and Alcohol Act.
The current market capitalization of DCSL Plc is over Rs. 82 billion as at date.
The Chairman of Melstacorp Ltd. is Harry Jayawardena. The Managing Director of Melstacorp is Amitha Gooneratne. The subsidiaries of Melstacorp are Lanka Bell Ltd., Melsta Regal Finance Ltd., Continental Insurance Lanka Ltd., Melsta Logistics Ltd., Bellvantage Ltd. and Balangoda Plantations Plc.
The company’s significant holdings include 43.96% of Aitken Spence Plc, 45.91% of Madulsima Plantations and 41.88% Browns Beach Hotels Plc.