Takeover Track

March 14, 2009 (LBO) - Fitch Ratings Lanka has confirmed the 'A-(lka)' rating of People's Leasing Company (PLC) with a stable outlook following its announcement of a possible takeover of a rival leasing firm, Seylan Merchant Leasing (SML). Fitch said it believes the firm's stronger financial profile should be able to comfortably absorb SML, which accounted for only nine percent of the "consolidated entity" assets.

"For instance, even in the highly unlikely event that would require PLC to write off all advances on SML's books, PLC's net NPL/Equity ratio is expected to remain comfortable for its current rating at approximately 10 percent (based on the financial position of both companies at 31 December 2008) compared to five percent on a standalone basis."

PLC is a specialised leasing company and is wholly owned by People's Bank of Sri Lanka ('A-(lka)' /Positive Outlook).

The company's total asset base stood at 25.4 billion rupees at end-December 2008.

SML is a registered finance company and is a 84 percent-owned subsidiary of SMB, which in turn is a 51.84 percent-owned subsidiary of Seylan Bank ('BBB+(lka)'/Stable Outlook).

SML's total assets amounted to 2.4 billion at end-December 2008.

Corrected - clar