Singer (Sri Lanka) PLC

Transcription

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2 Singer (Sri Lanka) PLC Debenture Issue 2016 Prospectus Joint Financial Advisors and Managers to the Issue Agora Securities (Private) Limited NDB Investment Bank Limited 1

3 ISSUE OF TEN MILLION (10,000,000) RATED UNSECURED SENIOR REDEEMABLE DEBENTURES AT A PAR VALUE OF LKR 100/= EACH TO RAISE SRI LANKA RUPEES ONE BILLION (LKR 1,000,000,000) WITH AN OPTION TO ISSUE UPTO A FURTHER TEN MILLION (10,000,000) OF THE SAID DEBENTURES TO RAISE UPTO SRI LANKA RUPEES ONE BILLION (LKR 1,000,000,000/-), AT THE DISCRETION OF THE COMPANY IN THE EVENT OF AN OVERSUBSCRIPTION OF THE INITIAL ISSUE TO BE LISTED ON THE COLOMBO STOCK EXCHANGE Rated A-(lka) by Fitch Rating Lanka Ltd ISSUE OPENS ON 10 th March 2016 Joint Financial Advisors and Managers to the Issue Agora Securities (Private) Limited 82 B/1 Bauddhaloka Mawatha, Colombo 04 Tel: , NDB Investment Bank Limited No. 40, Navam Mawatha, Colombo 02 Tel: The delivery of this Prospectus will not under any circumstance constitute a representation or create any implication or suggestion that there has been no material change in the affairs of the Company since the date of this Prospectus. If you are in doubt regarding the contents of this document or if you require any advice in this regard, you should consult your Stock Broker, Bank Manager, Lawyer or any other professional advisor. 2

4 Responsibility for the Content of the Prospectus This Prospectus is dated 02 nd March 2016 This Prospectus has been prepared by the joint managers to the issue on behalf of Singer (Sri Lanka) PLC (herein after sometimes referred to as the Company, Singer, Entity or the Issuer ) from information provided by the Company, its Directors and which is publicly available. The Company and its Directors having made all reasonable inquiries confirm that to the best of their knowledge and belief the information contained herein is true and correct in all material respects and, there are no other facts the omission of which would make any statement herein misleading. Where representations regarding the future performance of Singer have been given in this Prospectus, such representations have been made after due and careful enquiry of the information available to Singer and making assumptions that are considered to be reasonable at the present point in time in their best judgment. Singer accepts responsibility for the information contained in this Prospectus. While the Company has taken reasonable care to ensure full and fair disclosure, Singer does not assume responsibility for any investment decisions made by investors based on the information contained herein. When making investment decisions, prospective investors should rely on their own examination and assessment of the Company including the risks involved. Registration of the Prospectus A copy of this Prospectus has been delivered to the Registrar of Companies of Sri Lanka for registration in accordance with the provisions of Companies Act No. 7 of The following documents were attached to the copy of the Prospectus delivered to the Registrar of Companies. a) The written consent of the Company s Auditors/Reporting Accountants for the inclusion of their name and their Reports/Financial Statements in the form and context in which they are included in the Prospectus. b) The written consent of the Lawyers to the issue, Principal Banker to the Issue and Trustee to the Issue for the inclusion of their names in the Prospectus. c) The written consent of the Rating Agency, the Joint Financial Advisors and Managers to the Issue, Company Secretaries and Registrars to the Issue for the inclusion of their names and their Reports/Statements in the form and context in which they are included in the Prospectus. d) A declaration made by each of the Directors of the Company confirming that each of them have read the provisions of the Companies Act and the CSE Listing Rules relating to the Issue of the Prospectus and that those provisions and Rules have been complied with. The Company s Auditors/Reporting Accountants have given and have not before the delivery of a copy of the Prospectus for registration withdrawn their written consent for the inclusion of their name and Reports in the form and context in which they are included in the Prospectus. 3

5 The Lawyers to the Issue, Bankers to the Issue and Trustee to the Issue have given and have not before the delivery of a copy of the Prospectus for registration withdrawn the consent for the inclusion of their names in the Prospectus. The Rating Agency, the Joint Financial Advisors and Managers to the Issue, Company Secretaries and Registrars to the Issue have given and have not before the delivery of a copy of this Prospectus for registration withdrawn their written consent for the inclusion of their names and for the Inclusion of their Reports /Statements in the form and context in which they are included in the Prospectus. Registration of the Prospectus in Jurisdictions Outside of Sri Lanka This Prospectus has not been registered with any authority outside of Sri Lanka. Non-resident investors may be affected by the laws of the jurisdiction of their residence. Such investors are responsible to comply with the laws relevant to the country of residence and the laws of Sri Lanka, when making the investment. Representation The Debentures are issued solely on the basis of the information contained and representations made in this Prospectus. No dealer, sales person or any other person has been authorized to give any information or to make any representations in connection with the Issue other than the information and representations contained in this Prospectus, and if given or made, such information or representations must not be relied upon as having been authorized by the Company. Forward Looking Statements Any statements included in this Prospectus that are not statements of historical fact constitute Forward Looking Statements. These can be identified by the use of forward looking terms such as expect, anticipate, intend, may, plan to, believe, could and similar terms or variations of such terms. However, these words are not the exclusive means of identifying Forward Looking Statements. As such, all or any statements pertaining to expected financial position, business strategy, plans and prospects of the Company are classified as Forward Looking Statements. Such Forward Looking Statements involve known and unknown risks, uncertainties and other factors including but not limited to regulatory changes in the sectors in which the Company operates and its ability to respond to them, the Company s ability to successfully adapt to technological changes, exposure to market risks, general economic and fiscal policies of Sri Lanka, inflationary pressures, interest rate volatilities, the performance of financial markets both globally and locally, changes in domestic and foreign laws, regulation of taxes and changes in competition in the industry and further uncertainties that may or may not be in the control of the Company. Such factors may cause actual results, performance and achievements to materially differ from any future results, performance or achievements expressed or implied by Forward Looking Statements herein. Forward Looking Statements are also based on numerous assumptions regarding the Company s present and future business strategies and the environment in which the Company will operate in the future. 4

6 Given the risks and uncertainties that may cause the Company s actual future results, performance or achievements to materially differ from that expected, expressed or implied by Forward Looking Statements in this Prospectus, investors are advised not to place sole reliance on such statements. The Colombo Stock Exchange (CSE) has taken reasonable care to ensure full and fair disclosure of information in this Prospectus. However, the CSE assumes no responsibility for accuracy of the statements made, opinions expressed or reports included in this Prospectus. Moreover, as per the CSE Debt Securities listing rules section 2.2.1(i)the par value of a Debenture shall be Hundred Rupees (Rs. 100). Presentation of Currency Information and Other Numerical Data The financial statements of the Company and currency values of economic data or industry data in a local context will be expressed in Sri Lanka Rupees. References in the Prospectus to LKR, Rupees or Rs. are to the lawful currency of Sri Lanka. Certain numerical figures in this Prospectus have been subject to rounding adjustments, accordingly numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. 5

7 All Applicants should indicate in the Application for subscription of Debentures, the National Identity Card (NIC) number or the Company registration number (as the case may be). The Passport number may be indicated only if the Applicant does not have a NIC number. As per the Directive of the Securities & Exchange Commission of Sri Lanka made under Circular No.08/2010 dated 22 nd November 2010 and Circular No.13/2010 issued by the Central Depository System (Private) Limited dated 30 th November 2010, all Debentures shall be directly uploaded to the CDS, hence all Applicants should indicate their CDS Account number in their Application Form for subscription for Debentures. Applicants who do not have a CDS Account are advised to open a CDS Account prior to making the Application, in order to facilitate the uploading of allotted Debentures to the CDS. A CDS Account could be opened through any Member/Trading Member of the CSE as set out in Annexure III or any Custodian Bank as set out in Annexure IV of this Prospectus. PLEASE NOTE THAT UPON ALLOTMENT OF DEBENTURES UNDER THIS ISSUE THE ALLOTTED DEBENTURES WOULD BE CREDITED TO THE APPLICANT S CDS ACCOUNT INDICATED IN THE APPLICATION FORM. PLEASE NOTE THAT DEBENTURE CERTIFICATES WILL NOT BE ISSUED. If the CDS account number indicated in the Application Form is found to be inaccurate /incorrect or there is no CDS Account number indicated, the Application will be rejected and no allotment will be made. Where there is a discrepancy between the CDS Account details provided in the Application form and records held by the CDS, any discrepancy will be verified prior to transferring, in order to mitigate the risk of transferring the Debentures to an incorrect party. 6

8 ISSUE AT A GLANCE Issuer Instrument Listing Number of Debentures to be Issued Singer (Sri Lanka) PLC Rated Unsecured Senior Redeemable Debentures On the Colombo Stock Exchange An initial issue of Ten Million (10,000,000) Rated Unsecured Senior Redeemable Debentures with an option to issue up to a further Ten Million (10,000,000) of said Debentures, at the discretion of the Company, in the event of an oversubscription of the initial Issue Amount to be Raised Sri Lanka Rupees One Billion (LKR 1,000,000,000/-) with an option to raise up to a further Sri Lanka Rupees One Billion (LKR 1,000,000,000/-) at the discretion of the Company, in the event of an oversubscription of the initial Issue Issuer Rating Issue Rating Issue Price/Par Value A-(lka)/Stable by Fitch Ratings Lanka Limited A-(lka) by Fitch Ratings Lanka Limited LKR 100/- per Debenture Details of the Debentures Instrument Type Type A Fixed rate Type B Floating rate Interest Frequency Semi Annually Semi Annually Coupon (% p.a) Cap / Floor Annual Effective Rate (per annum) 10.50% N/A 10.78% 6 month Gross TB % Floor 9.50% Cap 12.50% Floor 9.73% Cap 12.89% Redemption (from the date of allotment) 36 months (3 Years) 36 months (3 Years) Minimum Number of Debentures A minimum of One Hundred (100) Debentures (LKR 10,000/-) and in multiples of One Hundred (100) Debentures (LKR 10,000/-) thereafter Interest Payment Date(s) The dates on which payments of interest in respect of both Type A and Type B Debentures shall fall due, which shall be six months from the Date of 7

9 Allotment and every six months therefrom of each year from the Date of Allotment until the Date of Redemption and includes the Date of Redemption. Interest would be paid not later than Three (03) Working Days from each Interest Payment due Date. In the event of the Final Interest, the Final Interest payment will be paid together with the Principal Sum within three (03) Market Days from the date of redemption/maturity. Mode of Payment By cheque marked "Account Payee Only" or through an electronic fund transfer of Principal Sum and mechanism recognized by the banking system of Sri Lanka such as SLIPS and RTGS. RTGS transfers however could be effected only for amounts over and above the maximum value that can be accommodated via SLIPS transfers (i.e. LKR 5,000,000/- as of the date of this Prospectus) Issue Opening Date 10 h March 2016 Date of Maturity of Debentures The date on which Redemption of the Debentures will take place as referred to in Section 5.6 of this Prospectus Closure Date of the Subscription List 31 st March 2016 or such earlier date on which; Maximum of 20,000,000 Debentures are fully subscribed The Board of Directors of the Company decides to close the Issue upon the initial Issue of 10,000,000 Debentures becoming fully subscribed or such other higher amount less than the maximum amount of 20,000,000 Debentures referred to above becoming fully subscribed. The subscription list will then close at 4.30p.m on the market day succeeding the date of notification made to CSE. Date of Allotment The date on which the Debentures will be allotted by the Company to Applicants subscribing thereto 8

10 Basis of Allotment In the event of an Oversubscription, the Board of Directors of Singer will decide the basis of allotment of the Debentures in a fair manner as soon as practicable The Board however shall reserve the right to allocate up to 75% of the number of Debentures to be allotted under this Prospectus on a preferential basis, to identified institutional investor/s of strategic importance with whom the Company might have mutually beneficial relationships in the future. 9

11 TABLE OF CONTENTS 1.0 CORPORATE INFORMATION RELEVANT PARTIES TO THE ISSUE LIST OF ABBREVIATIONS GLOSSARY OF TERMS RELATED TO THE ISSUE PRINCIPAL FEATURES OF THE RATED UNSECURED SENIOR REDEEMABLE DEBENTURES PARTICULARS OF THE ISSUE INVITATION TO SUBSCRIBE SUBSCRIPTION LIST OBJECTIVES OF THE ISSUE INTEREST REDEMPTION PAYMENT OF PRINCIPAL SUM AND INTEREST TRUSTEE TO DEBENTURE HOLDERS RATING OF THE DEBENTURES RIGHTS AND OBLIGATIONS OF DEBENTURE HOLDERS BENEFITS OF INVESTING IN DEBENTURES OFFERED BY THE COMPANY RISKS INVOLVED IN INVESTING IN THE DEBENTURES TRANSFER OF DEBENTURES LISTING COST OF THE ISSUE UNDERWRITING PROCEDURE FOR APPLICATION ELIGIBLE APPLICANTS HOW TO APPLY NUMBER OF DEBENTURES TO BE SUBSCRIBED MODE OF PAYMENT OF THE INVESTMENT BY THE APPLICANTS REJECTION OF APPLICATIONS BANKING OF PAYMENTS BASIS OF ALLOTMENT OF DEBENTURES

12 6.9 REFUNDS CDS ACCOUNTS AND SECONDARY MARKET TRADING THE COMPANY BACKGROUND AND NATURE OF BUSINESS FUTURE STRATEGIES RISKS ATTACHED TO FUTURE STRATEGIES SEGMENT INFORMATION DETAILS OF THE GROUP STRUCTURE AS AT 31 ST JANUARY STATED CAPITAL MAJOR SHAREHOLDERS AS AT 31 st JANUARY HUMAN RESOURCES PARTICULARS OF BORROWINGS DETAILS OF OTHER DEBENTURES ISSUED - COMPANY DETAILS OF CONVERTIBLE DEBT SECURITIES FINANCIAL RATIOS COMPANY COMMITMENTS AND ASSETS PLEDGED CONTINGENT LIABILITIES AND LITIGATION DETAILS OF PENALTIES IMPOSED BY REGULATORY AND STATE AUTHORITIES DETAILS OF MATERIAL CONTRACTS DETAILS OF COMMISSIONS AND BENEFITS PAID DIVIDEND POLICY TAXATION BOARD OF DIRECTORS DETAILS OF THE DIRECTORS DIRECTORS PROFILES DIRECTORS AND CEO'S SHAREHOLDING AS AT 31 st JANUARY DIRECTORS INTEREST IN ASSETS/RELATED PARTY TRANSACTIONS DIRECTORS INTEREST IN MATERIAL CONTRACTS STATUTORY DECLARATIONS DECLARATION BY THE DIRECTORS STATUTORY DECLARATION BY JOINT FINANCIAL ADVISORS AND MANAGER TO THE ISSUE

13 10.0 FINANCIAL INFORMATION ANNEXURE I - RATING REPORT Annexure II ANNEXURE III - COLLECTION POINTS ANNEXURE IV - CUSTODIAN BANKS

14 1.0 CORPORATE INFORMATION Name of Company/Issuer Singer (Sri Lanka) PLC Legal Status A Public Quoted Company with limited liability incorporated as a public company in Sri Lanka on 30th December 1974 under the Companies Ordinance and re-registered under the Companies Act No. 07 of 2007 on 13th June Company Number PQ 160 Place of Incorporation Colombo, Sri Lanka Registered Office& Head Office No. 80, Nawam Mawatha, Colombo 2, Sri Lanka Tel: (13 lines) Fax: singer@singersl.com Website: Secretary to the Company A.C.M. Irzan FCMA (UK) Tel: Auditors/Reporting Accountants KPMG Chartered Accountants No. 32A, Sir Mohamed Macan Markar Mawatha, P.O. Box 186, Colombo 3 Tel: Fax:

15 Board of Directors Dr. Saman Kelegama Mr. H.A. Pieris Mr. Ranil de Silva Mr Deepal Sooriyaarachchi Mr. G.J. Walker Mr. P.J.O Donnell Mr. J.J. Hyun Mr. L.N.S. Kumara Samarasinghe Alternate Director Mr. M.H. Wijewardene Alternate Director Mr. A.S. Paranavitane Alternate Director Mr. K.K.L.P. Yatiwella Alternate Director 14

16 2.0 RELEVANT PARTIES TO THE ISSUE Joint Financial Advisors and Managers to the Issue Agora Securities (Private) Limited 82 B/1 Bauddhaloka Mawatha, Colombo 04 Tel: Fax: NDB Investment Bank Limited No. 40, Navam Mawatha, Colombo 02 Tel: Fax: Lawyers to the Issue Nithya Partners No. 97A Galle Road Colombo 03 Tel: Fax: Registrars to the Issue Business Intelligence (Private) Limited No 8 Tickle Road Colombo 8 Tel: Fax: Bankers to the Issue Rating Agency to the Issue Commercial Bank of Ceylon PLC Commercial House No 21 Sir Razik Fareed Mawatha P.O.Box 856 Colombo 1 Tel: Fax: Fitch Ratings Lanka Limited No , East Tower World Trade Centre Colombo 01 Tel: Fax:

17 Trustee to the Issue Deutsche Bank AG, Colombo No. 86, Galle Road Colombo 03 Tel: Fax:

18 3.0 LIST OF ABBREVIATIONS AER Annual Effective Rate ATS AWPLR Bn CBSL CDS CSE LKR, Rs, Rupees Mn NIC POA RTGS SEC SIA SLIPS SME TB Automated Trading System of the Colombo Stock Exchange Average Weighted Prime Lending Rate Billion Central Bank of Sri Lanka Central Depository Systems (Private) Limited Colombo Stock Exchange Sri Lankan Rupees Million National Identity Card Power of Attorney Real Time Gross Settlements Securities and Exchange Commission of Sri Lanka Securities Investment Account Sri Lanka Inter Bank Payment System Small and Medium Enterprises Treasury Bill 17

19 4.0 GLOSSARY OF TERMS RELATED TO THE ISSUE Applicant Application Form/ Application Any person who submits an Application Form under this Prospectus The application form that constitutes part of this Prospectus through which an Applicant may apply for the Debentures in Issue Closure Date 31 st March 2016 or such earlier date on which; Maximum of 20,000,000 Debentures are fully subscribed The Board of Directors of the Company decides to close the Issue upon the initial Issue of 10,000,000 Debentures becoming fully subscribed or such other higher amount less than the maximum amount of 20,000,000 Debentures referred to above becoming fully subscribed. The subscription list will then close at 4.30 p.m on the market day succeeding the date of notification made to CSE. Company/Issuer/Entity Singer (Sri Lanka) PLC Date of Allotment The date on which the Debentures will be allotted by the Company to Applicants subscribing thereto Date of Redemption The date on which Redemption of the Debentures will take place as referred to in Section 5.6 of this Prospectus Debentures Debenture Holder(s) Rated Unsecured Senior Redeemable Debentures to be issued pursuant to this Prospectus Any person who is for the time being the holder of the Debentures and includes his/her respective successors in title 18

20 Entitlement Date The Market Day immediately preceding the respective Interest Payment Date or Date of Redemption on which a Debenture Holder would need to be recorded as being a Debenture Holder on the list of Debenture Holders provided by the CDS to the Company in order to qualify for the payment of any interest or any Redemption proceeds Interest Payment Date(s) The dates on which payments of interest in respect of both Type A and Type B Debentures shall fall due, which shall be six months from the Date of Allotment and every six months therefrom of each year from the Date of Allotment until the Date of Redemption and includes the Date of Redemption. Interest would be paid not later than Three (03) Working Days from each Interest Payment due Date. In the event of the Final Interest, the Final Interest payment will be paid together with the Principal Sum within three (03) Market Days from the date of redemption/maturity. Interest Period means the six (6) month period from the date immediately succeeding a particular Interest Payment Date and ending on the next Interest Payment Date (inclusive of the aforementioned commencement date and end date) and will include the period commencing from the Date of Allotment and ending on the first Interest Payment Date (inclusive of the aforementioned commencement date and end date) and the period from the date immediately succeeding the last Interest Payment Date before the Date of Redemption and ending on the date immediately preceding the Date of Redemption (inclusive of the aforementioned commencement date and end date) Issue The offer of Debentures pursuant to this Prospectus Issue Price LKR 100/- per Debenture Market Day A day on which trading takes place at the CSE 19

21 Non-Resident(s) Foreign institutional investors, corporate bodies incorporated outside Sri Lanka, individuals resident outside Sri Lanka and Sri Lankans resident outside Sri Lanka Six Month Gross TB Rate (Coupon) The six month gross treasury bill rate published by the Central Bank of Sri Lanka Par Value LKR 100/- per Debenture Principal Sum The product of the number of Debentures allotted and the Par Value Prospectus This Prospectus dated 02 nd March 2016 issued by Singer (Sri Lanka) PLC Redemption Repayment of the Principal sum on these Debentures Senior Debt In relation to the Debentures means the claims of the Debenture Holders shall in the event of winding up of the Company rank after all the claims of secured creditors and preferential claims under any Statutes governing the Company but pari passu to the claims of unsecured creditors of the Company and shall rank in priority to and over any subordinated debt of the Company and the claims and rights of the preference and ordinary shareholder/s of the Company. Trust Deed Trust deed executed between Singer and Deutsche Bank AG, Colombo on 17 th February 2016 Trustee Deutsche Bank AG, Colombo 20

22 Unsecured Repayment of the Principal Sum and payment of interest on the Debentures are not secured by any specific asset of Singer Working Day A day (other than a Saturday or Sunday or any statutory holiday) on which licensed commercial banks are open for business in Sri Lanka 21

23 5.0 PRINCIPAL FEATURES OF THE RATED UNSECURED SENIOR REDEEMABLE DEBENTURES 5.1 PARTICULARS OF THE ISSUE The Board of Directors of Singer (Sri Lanka) PLC (hereinafter referred to as the Board ) by resolution dated 8 th December 2015 resolved to raise a sum of up to Sri Lanka Rupees Three Billion (LKR 3,000,000,000/-) by an issue of up to Thirty Million (30,000,000) Debentures each with a Par Value of LKR 100/-. As such, a maximum amount of Sri Lanka Rupees Two Billion (LKR 2,000,000,000/-) would be raised by the issue of a maximum of Twenty Million (20,000,000) Debentures each with a Par Value of LKR 100/-. It is the intention of the Company to list the Debentures on the CSE. The CSE has given its in-principle approval for the listing of the Debentures on the CSE. 5.2 INVITATION TO SUBSCRIBE Singer hereby invites the Public to make applications for the subscription of Ten Million (10,000,000) Rated Unsecured Senior Redeemable Three Year (03 year) Debentures at an Issue Price of LKR 100 each payable in full as outlined in this Prospectus with an option to issue up to a further Ten Million (10,000,000) of said Debentures, at the discretion of the Company, in the event of an oversubscription of the initial Issue. The repayment of the principal and Interest on these Debentures are not secured by any specific assets of Singer. The rights of these Debenture Holders in the event of a winding up of the Company would rank in priority to the subordinated creditors of the Company but after the secured Creditors of the Company and any preferential claims under any Statutes governing the Company and also in priority to and over the claims and rights of the ordinary and preference shareholders of the Company. Two (2) types of Debentures described below shall rank equal and pari-passu with each other, without any preference or priority one over the other except for information more fully set out in page 7 Issue at a Glance Details of the Debentures. They shall also rank equal and pari passu with other Rated Unsecured Senior Redeemable Debentures already in issue, and differ only with respect to the year of redemption and interest rates, without any preference of priority of one over the other. Type A The Debentures will carry a Fixed Interest Rate of 10.50% p.a. payable semi annual, from the Date of Allotment until the expiry of Three (3) years from the Date of Allotment (Giving an Annual Effective Rate or AER of 10.78% p.a.) on the principal sum of the Debentures. The tenure of the Debenture will be Three (3) years 22

24 Type B The Debentures will carry a Floating Interest Rate of 6 month Gross TB % p.a. (Floor 9.50%, Cap 12.50%) payable semi-annually from the Date of Allotment until the expiry of Three (3) years from the Date of Allotment on the principal sum of the Debentures. The tenure of the Debenture will be Three (3) years. 5.3 SUBSCRIPTION LIST Subject to the provisions contained below, the subscription list for the Debentures will open at 9.30 a.m. on 10 th March 2016 and will remain open for fourteen (14) Market Days including the Issue opening date until closure at 4.30 p.m. on 31 st March However, the subscription list will be closed on an earlier date at 4.30 p.m. with the notification to the CSE on the occurrence of the following; Maximum of 20,000,000 Debentures are fully subscribed. The Board of Directors of the Company decides to close the Issue upon the initial Issue of 10,000,000 Debentures becoming fully subscribed or such other higher amount less than the maximum amount of 20,000,000 Debentures referred to above becoming fully subscribed. The subscription list will then close at 4.30 p.m on the market day succeeding the date of notification made to CSE. Applications can be made forthwith in the manner set out in Section 6.0 of this Prospectus and duly completed Application Forms will be accepted at any one of the collection points set out in Annexure III. 5.4 OBJECTIVES OF THE ISSUE The entire proceeds of the issue would be utilized to finance working capital needs of the Company in order to achieve the following objectives. The Company prioritizes in settling the maturing debt and secure long term funding to mitigate the interest rate and liquidity risk. To finance the term loan of USD 10 million (approximately LKR 1,407.5 million) maturing in July 2016 which was obtained by Singer Sri Lanka PLC in order to restructure the balance sheet by locking in one year funds to minimize the short term interest rate risk and liquidity risk. The company intends to lock in longer term funds in settlement of this one year term loan. The balance Rs million will be used to part finance the settlement of senior, listed, unsecured, rated, redeemable debenture of Rs 900 million maturing in May The difference of Rs million to meet the maturing debenture repayment will be financed with bank borrowings. The company has decided to execute this debenture issue now in order to minimize the impact of rising interest rates and deteriorating market liquidity expected to exist in May and in July 2016 when the above mentioned loans fall due. Keeping in line with prudent treasury management, in the interim period until the above maturities fall due, the proceeds of this debenture issue would be utilised to reduce short term bank loans in an appropriate way. The said short term bank loans are obtained by the Company from commercial banks such as Nations Trust Bank, 23

25 Commercial Bank, Sampath Bank to finance ongoing working capital requirements. The company intends to settle these short term loans immediately upon receipt of the debenture proceeds. Details of debt to be settled from Debenture Issue facilities following the redrawing borrowings of short term loans. Date of Issue/borrowing 17 th July May 2013 Type Term Loan Debenture Amount (LKR) Approx 1,407.5 Mn 1500Mn * Objective of the issue To settle the short term loan obligations and re structure the B/S of the company To minimize the short term funding exposure and restructure the balance sheet *Rs 600mn has been already settled (Type A). A part of the remaining balance of Rs 900mn will be settled from this issue. short term loans to be settled in the interim period Bank Amount to be settled Type (Rs) Nations Trust Bank 400 Mn Short term Loan Commercial Bank 800 Mn Short Term Loan Sampath Bank 800 Mn Short Term Loan Specific Risk Relating to Objectives Dependency of proceeds of the Issue to achieve the objectives is marginal as the Company in the ordinary course of business has access to multiple sources of funds such as bank borrowings and commercial papers. Currently, the Company also has unutilized bank facilities amounting to approximately Rs. 6 billion. Time and quantum of maturing liabilities to be refinanced through the issue are fixed as per the agreements with relevant lenders/investors. As such, there is no uncertainty with regard to the utilization of issue proceeds for the objectives. Further, the Company has enough outstanding short term bank loans to be settled until the issue proceeds are utilized for the above stated objectives. 5.5 INTEREST The Debentures consist of two interest options for the investors to choose from and they rank equal and pari-passu to each other, except for information more fully set out in page7 Issue at a Glance Details of the Debentures. Type A The Debentures will carry a Fixed Interest Rate of interest of 10.50% per cent payable semi annually, from the Date of Allotment until the expiry of Three (3) years from the Date of Allotment (Giving an Annual Effective Rate or AER of 10.78% p.a.) on the principal sum of the Debentures. The tenure of the Debenture will be Three (3) years. Semi annual Interest payments on the Debentures accruing on a daily basis will be paid on 6 monthly intervals, from the Date of Allotment until the Date of Redemption on the outstanding Principal Sum. 24

26 Type B The Debentures will carry a Floating Interest Rate of Six Month Gross TB % p.a. (Floor 9.50%, Cap 12.50%) which will be determined and made available to the CSE prior to the interest payment period, payable semiannually from the Date of Allotment until the expiry of Three (3) years from the Date of Allotment on the principal sum of the Debentures. The tenure of the Debenture will be Three (3) years. Semi-annual interest payments on the Debentures accruing on a daily basis will be paid on 6 monthly intervals, from the Date of Allotment until the Date of Redemption on the outstanding Principal Sum. The interest due on the Debentures for a particular Interest Period will be calculated based on the actual number of days in such Interest Period (actual/actual) and will be paid not later than three (03) Working Days from each Interest Payment due Date. In the event of the Final Interest, the Final Interest payment will be paid together with the Principal Sum within three (03) Market Days from the date of redemption/maturity. For avoidance of doubt, the date of redemption/maturity will not be included or taken into account for purposes of calculating the interest due on the Debentures for the Final Interest Period. In order to accommodate the Debenture interest cycles in the Automated Trading System of the CSE, the payment of interest for a particular Interest Payment Date will not include Debenture Holders holding Debentures in the CDS as at the last day of the payment cycle but one day prior to the Interest Payment Date (Entitlement Date). If the entitlement date is a holiday, interest shall be calculated including the entitlement date. As per Section 9 (o) of the Inland Revenue Act No. 10 of 2006 ( as amended by section 4 of the Inland Revenue (Amendment) Act No. 18 of 2013), the interest income from any investment made on or after the January 1, 2013 in corporate debt securities (i.e. Debentures), quoted in any stock exchange licensed by the SEC is exempt from income tax. Furthermore, in terms of Section 13 (xxxxxxx) (i) of the Inland Revenue Act No. 10 of 2006 (as amended by section 5 (3) of the Inland Revenue (Amendment) Act No. 18 of 2013), the profits and income earned from any such investment have also been exempted from income tax. 5.6 REDEMPTION The Redemption of the Debentures will take place on the date on which a period of Three (03) years from the Date of Allotment expires in accordance with the provisions contained in the Trust Deed. The debenture holders shall not have any right or option to call for redemption of the Debentures before the date of maturity of such debentures, except in the circumstances where the Debentures have become immediately payable in terms of Clause 10 of the Trust Deed. The Company shall not have any right or option to call for an early redemption of the Debentures prior to the Date of Redemption. On the date of Maturity of the Debentures the Company shall in accordance with the provisions contained in the Trust Deed pay to the Debenture holders the principal sum of the debentures which ought to be redeemed and interest (if any) remaining unpaid up to the date of Maturity. 25

27 If the date of Maturity falls on a day which is not a Market Day, the Debentures will be redeemed on the Market Day immediately succeeding such date and interest shall be paid up to the date immediately preceding such Market Day (including holidays). 5.7 PAYMENT OF PRINCIPAL SUM AND INTEREST The Company will redeem the Debentures on the respective Date of Redemption as specified in Section 5.6 and the interest payments will be made as specified in Section 5.5. The payment of Principal Sum and interest will be made either by cheque/s marked Account Payee Only" dispatched to the address provided by the Debenture Holders to the CDS at the risk of the Debenture Holders or In the event the accurate details have been provided, through an electronic fund transfer mechanism recognized by the banking system of Sri Lanka such as SLIPS and RTGS to a bank account provided to the CDS by the Debenture Holders. RTGS transfers however could be effected only for amounts over and above the maximum value that can be accommodated via SLIPS transfers (i.e. LKR 5,000,000/- as of the date of this Prospectus). However, in the event if the Debenture Holder has not provided to the CDS accurate and correct details of his/her bank account for the payment of Principal Sum and interest, such payment to the Debenture Holder will be made by way of a cheque and sent by post at the risk of the Debenture Holder. The payment of Principal Sum and interest will be made in Sri Lanka Rupees in favor of the Debenture Holders within 3 days of the date of maturity. In the case of joint Debenture Holders, the payment of Principal Sum and interest will be made to the one whose name stands first in the Register of Debenture Holders. 5.8 TRUSTEE TO DEBENTURE HOLDERS Deutsche Bank AG, Colombo has agreed to act as the Trustee to the Debenture Holders. The Company has entered into an agreement with the Trustee (hereinafter called the "Trust Deed"). Debenture Holders in their Application Forms for subscription will be required to authorize the Trustee to act as their agent in entering into such deeds, writings and instruments with the Company and to act as the agent and Trustee for the Debenture Holders. The rights and obligations of the Trustee are set out in the Trust Deed and the Debentures will be subject to the terms and conditions incorporated in the said Trust Deed. The fee payable to the Trustee will be LKR 25, per month plus statutory levies. There is no conflict of interest between the Trustee and the Company, except that the Trustee is one of the banks rendering banking related services to the Company. 5.9 RATING OF THE DEBENTURES Fitch Ratings Lanka Limited has assigned a National Long Term credit rating of A-(lka) to the Debentures as per the report dated 23 rd February Singer (Sri Lanka) PLC has been assigned an Entity Rating of A-(lka)/Stable by Fitch Ratings Lanka Limited as per the rating report dated 11 th August Source: 26

28 A copy of the Rating Certificate is given in Annexure I of this Prospectus RIGHTS AND OBLIGATIONS OF DEBENTURE HOLDERS (a) Debenture Holders are entitled to the following rights. Receiving interest on Interest Payment Dates at the rate of interest set out in Section 5.5 of this Prospectus and the Principal Sum on the Date of Redemption as set out in Section 5.6 of this Prospectus and provisions contained in the Trust Deed. To receive the Annual Report of the Company. Rank in priority to the subordinated creditors of the Company but after the secured Creditors of the Company and any preferential claims under any Statutes governing the Company and also in priority to and over the claims and rights of the shareholders of the Company. To call, receive notice, attend and vote at the Meetings of Debenture Holders in accordance with the provisions in the Trust Deed. The other rights of the holders of these Debentures are set out in the Trust Deed. (b) Debenture Holders do not have the following rights. To receive notice, attend and vote at meetings of holders of shares of the Company. To receive any dividend or distributions or share the profits of the Company To participate in any surplus assets of the Company in the event of liquidation. The Debenture Holders will not be entitled to any rights or privileges of the holders of any other Debentures issued by the Company, including the right to receive notice, attend and vote at the meetings of holders of other Debentures issued by the Company. (c) Each Debenture Holder must ensure that the information in respect of the securities account maintained with the CDS is up to date and accurate. Where there is a discrepancy between the CDS Account details provided in the Application form and records held by the CDS, any discrepancy will be verified prior to transferring, in order to mitigate the risk of transferring Debentures to an incorrect party. Each Debenture Holder shall absolve the Company from any responsibility or liability in respect of any error or inaccuracy or absence of necessary changes in the information recorded with the CDS. Each Debenture Holder shall absolve the CSE and the CDS from any responsibility or liability in respect of any error or inaccuracy or absence of necessary changes in the information recorded with the CDS where such errors or inaccuracies or absence of changes are attributable to any act or omission of the Debenture Holders BENEFITS OF INVESTING IN DEBENTURES OFFERED BY THE COMPANY (a) Provides an opportunity to diversify the investment portfolio of the investor. (b) Provides the investor with a regular cash inflow of interest payments. (c) Provides the investor with an opportunity to invest in Debentures issued by a leading Company in Sri Lanka. 27

29 (d) Being listed on the CSE, the Debentures will have a secondary market, thus providing the investor with an opportunity to exit at the market price prevailing at the time of divestiture. (e) The Debentures may be used as collateral to obtain credit facilities from banks and financial institutions. (f) As per Section 9(o) of the Inland Revenue Act No. 10 of 2006 (as amended by section 4 of the Inland Revenue (Amendment) Act No. 18 of 2013), the interest income from any investment made on or after 01st January 2013 in corporate debt securities (i.e. debentures), quoted in any stock exchange licensed by the SEC is exempt from income tax. Furthermore, in terms of Section 13(xxxxxxx) (i) of the same Act, the profits and income earned from any such investment has also been exempted from income tax RISKS INVOLVED IN INVESTING IN THE DEBENTURES Subscribers to the Debentures could be exposed to the following risks. (a) Interest Rate Risk Provided all other factors are equal, the market price of the Debentures will generally fluctuate in the opposite direction to the fluctuation in market interest rates. Thus, the interest rate risk could be identified as the reduction in the market price of Debentures resulting from a rise in interest rates. (b) Reinvestment Risk Interest on the Debentures are payable semi-annually, depending on the frequency of interest payments. An investor may decide to reinvest these interest payments and earn interest from that point onwards. Depending on the prevailing interest rates at the point of reinvestment, the risk of returns generated by Debenture Holders by reinvesting such interest received being higher or lower than the return offered by the Debentures is known as reinvestment risk. (c) Call Risk The uncertainty to the debenture investor is when the issuer has the option of redeeming the debentures before maturity, thus being called upon to terminate the investment early is known as "Call Risk". However, these Debentures do not carry this risk as call options are not available with these Debentures. (d) Credit Risk Credit Risk is also referred to as default risk. This is the risk that the issuer of a debenture may default, i.e. the issuer will not be able to pay interest and principal payments on a timely basis. This risk is gauged in terms of rating assigned by different rating agencies. Fitch Ratings Lanka Limited has assigned a Long-term Rating of A-(lka) to these Debentures and will be periodically reviewing the same. (e) Liquidity Risk Liquidity risk is associated with the ease in which an investment can be sold after the initial placement. In order to reduce the liquidity risk of the Debentures, the Company has applied for a listing of these Debentures on the CSE 28

30 and has received in-principle approval for such listing whereby Debenture Holders will be able to sell the Debentures through the CSE in order to convert the Debentures to cash and exit from the investment. (f) Duration Risk Duration risk is a measure of the price sensitivity of fixed income investments to a change in interest rates, based on the time to maturity of principal and coupon payments. The higher the duration, the greater the price volatility or duration risk, while a lower duration carries a lower risk TRANSFER OF DEBENTURES The Debentures will be transferable and transmittable in the manner set out in the Trust Deed, which is reproduced below. (a) These Debentures shall be freely transferable and the registration of such transfer shall not be subject to any restriction, save and except to the extent required for compliance with statutory requirements. (b) The Debentures shall be transferable and transmittable through the CDS as long as the Debentures are listed on the CSE. Subject to the provisions contained herein the Company may register without assuming any liability any transfer of Debentures, which are in accordance with the statutory requirements and rules and regulations in force for the time being as laid down by the CSE, SEC and the CDS. (c) In the case of death of a Debenture Holder; The survivor where the deceased was a joint holder; and The executors or administrators of the deceased or where the administration of the estate of the deceased is in law not compulsory the heirs of the deceased where such Debenture Holder was the sole or only surviving holder; shall be the only persons recognized by the Company as having any title to his/her Debentures. (d) Any person becoming entitled to any Debentures in consequence of bankruptcy or winding up of any Debenture Holder, upon producing proper evidence that he/she/it sustains the character in respect of which he/she/it proposes to act or his/her title as the Board of Directors of the Company thinks sufficient may in the discretion of the Board be substituted and accordingly registered as a Debenture Holder in respect of such Debentures subject to the applicable laws, rules and regulations of the Company, CDS, CSE and SEC. (e) No change of ownership in contravention to these conditions will be recognized by the Company LISTING An application has been made to the CSE for permission to obtain a listing for the Debentures and the CSE has granted its approval in-principle for the same. It is the intention of the Company to list the Debentures on the Colombo Stock Exchange upon the allotment thereof. 29

31 The CSE however, assumes no responsibility for the correctness of the statements made or opinions expressed or reports included in this Prospectus. Admission to the official list is not to be taken as an indication of the merits of the Company or of its Debentures COST OF THE ISSUE The Board estimates that the total cost of the Issue including fees to professionals, printing, advertising and other costs connected with the Issue will be approximately LKR Mn. Such costs will be financed by internally generated funds of the Company UNDERWRITING The offering is not conditional upon any minimum subscription amount being raised through this Issue. The Company has not entered into any underwriting arrangement with regards to this Issue. In the event of an undersubscription of the issue, singer will bridge the gap to achieve its objectives via Rs 6 Bn unutilized Bank facilities available to the company. 30

32 6.0 PROCEDURE FOR APPLICATION 6.1 INSPECTION OF DOCUMENTS Articles of Association, the Trust Deed, Auditors Reports and Audited Financial Statements for the five (05) financial years ended 31 st December 2014 (i.e. the five (05) financial years immediately preceding the date of this Prospectus) and all other documents referred to in Rule (a) of the CSE Listing Rules, including material contracts and management agreements entered into by the Company (if any) are available for inspection by the public during normal working hours, from seven (07) Market Days prior to the date of opening of the subscription list, at the registered office of the Company at No. 80, Nawam Mawatha, Colombo 02, Sri Lanka until the Date of Redemption of the Debentures. The Prospectus, Trust Deed and Articles of Association of the Company are available on the website of CSE, and the website of the Company, from seven (07) Market Days prior to the date of opening of the subscription list until the Date of Redemption of the Debentures as stipulated in Rule (b) of the CSE Listing Rules. Furthermore, copies of the Prospectus and Application Forms are available free of charge from the collection points set out in Annexure III of this Prospectus from seven (07) Market Days prior to the date of opening of the subscription list. 6.2 ELIGIBLE APPLICANTS Applications are invited for the subscription of Debentures from the following categories of applicants. (a) Citizens of Sri Lanka, resident in Sri Lanka and above 18 years of age. (b) Corporate bodies and societies registered/incorporated/established in Sri Lanka and authorized to invest in Debentures. (c) Approved unit trusts licensed by SEC. (d) Approved provident funds and contributory pension schemes registered/incorporated/established in Sri Lanka and authorized to invest in Debentures. In the case of approved provident funds and approved contributory pension schemes, the Application should be in the name of the trustee/board of management. (e) Foreign citizens above 18 years of age (irrespective of whether they are resident in Sri Lanka or overseas) (f) Regional and country funds approved by SEC and authorized to invest in Debentures. (g) Non-Residents: foreign institutional investors, corporate bodies incorporated outside Sri Lanka, individuals resident outside Sri Lanka and Sri Lankans resident outside Sri Lanka. 31

33 Applications will not be accepted from Applicants who are under the age of 18 years, or in the names of sole proprietorships, partnerships or unincorporated trusts. The Company will comply with Exchange Control Act and all regulations published there under including those contained in Government Gazette Extraordinary No 1681/11 dated 22 November 2010, Government Gazette Extraordinary No 1733/19 dated 22 November 2011 and Government Gazette Extraordinary No 1864/39 dated 28 th May 2014when issuing and transferring Debentures to Non-Residents. Non-resident investors may make their investments in listed debentures only out of a Securities Investment Account (SIA) opened in the Domestic Banking Unit of any licensed commercial Bank. Payments such as bank charges, Government taxes, stamp duty etc related to the acquisition of debentures can be made out of the funds in the SIA. 6.3 HOW TO APPLY The terms and conditions applicable to the Applicants are as follows. (a) Applications should be made on the Application Forms, which accompany and constitute a part of this Prospectus (exact size photocopies of Application Forms will also be accepted). Care must be taken to follow the instructions given herein and in the Application Form. Applicants using photocopies are requested to inspect the Prospectus which is available for inspection with the Registrar to the Issue and also issued free of charge by the parties listed in Annexure III of this Prospectus. The Application Form can also be downloaded from the website of CSE, and the website of Singer, until the Closure Date. The Prospectus is available and can be downloaded from the website of CSE, and the website of Singer, until the Date of Redemption of the Debentures. Applications which do not strictly conform to instructions and other conditions set out herein or which are incomplete or illegible may be rejected. (b) An Applicant can apply under one Application Form only. If an Applicant has applied under more than one Application Form it will be construed as multiple Applications. An Applicant of a joint Application, applying through another Application Form is also deemed to have made multiple Applications and the Company reserves the right to reject such multiple Applications or suspected multiple Applications. (c) If the ownership of the Debentures is desired in the name of one Applicant, full details should be given only under the heading SOLE/FIRST APPLICANT in the Application Form. In the case of joint Applicants, the signatures and particulars in respect of all Applicants must be given under the relevant headings in the Application Form. (d) An Applicant of a joint Application will not be eligible to apply for the Debentures through a separate Application Form either individually or jointly. Such Applicants are also deemed to have made multiple Applications 32