SL bidder for EAP Group chastises CBSL Over negotiation process

A Sri Lankan bidder, for the failing EAP Group, has complained, to the Governor of the Central Bank Dr. Indrajit Coomaraswamy, that the bidding process to acquire these properties is ‘opaque’ and does not follow the spirit of transparency and good governance.

According to information received by Ceylon Today, the local company, Shri Krishna Investments Private Limited, has submitted a bid of US$ 61 million for the assets which include the Edirisinghe family’s (former owners of the EAP Group) companies which are now being run by the Central Bank.

The companies are Swarnamahal Financial Services, the EAP Broadcasting Company which includes the Swarnavahini……Television station, the EAP Films which includes theatres, Hotel Sapphire and the Swarnamahal Jewellers.
The local bidder, in a letter to the Governor, said that their bid is not being taken seriously by the Central Bank.

In its letter, the company says that the response “we have received from the Central Bank for the bid has been truly unexpected.

Instead of welcoming our offer to purchase the assets of the ETI Finance Limited, which would have created a ‘competitive’ environment, the Central Bank seems to be eager to ignore and/or side-step our offer. Instead of attempting to get the best possible ‘price’ for the assets of the ETI Finance Ltd, the Central Bank seems keen to follow an opaque negotiation process with just one bidder. This reaction indicates a rather suspicious bias and a possible hidden agenda which, in our view would not ‘safeguard the interests of the depositors and the other creditors of the two companies’, as well as not ‘ensure the safety and soundness of the financial system’.”

It has pointed out that the company had offered to begin due diligence of the properties concerned and was willing to set up a bond.

The other party in the fray is Singapore-based Straits Grid Limited, brokered by Malaysian businessman Sudhir Jayaram, which has submitted a bid of US$ 60 million

for the properties. Jayaram was detected at the Katunayake airport carrying around US$ 50,000 cash out of the country.

Sources say that the actual buyer is the British based Lyca Group, owned by Sri Lankan-born billionaire Allirajah Subaskaran. He also has some controversy surrounding him as he was linked to alleged money-laundering scams in France.

Media industry sources have expressed concern that the deal will mean that precious Television and Radio frequencies would go to a foreigner. Many leading media organizations who have applied for frequencies have not been given them.

In addition, the Board of Investments rules do not allow foreigners to own more than a 40 per cent stake in media companies.

Swarnamahal Finance circulated a stock market filing yesterday (20) in which the company said that negotiations are presently ongoing and that the deal has not yet received the Central Bank’s approval. This was in response to speculative news reports that the sale to Lyca was going through yesterday.

Lyca has formerly been involved in business in Sri Lanka through the Sky Network, an internet service provider that partnered with Sri Lanka Telecom.

The foreign bidder has already conducted its due diligence and also offered a Rs 400 million loan facility to the EAP to tide over its liquidity issues, the Central Bank said.