JKH $ 80 Million Private Placement in Fundraising Offer with ADB – The Island

The Board of Directors of John Keellls Holdings has decided to raise funds through a private placement for a maximum cumulative amount of the Sri Lankan Rupee equivalent of US $ 80 million to the Asian Development Bank by the issuance of up to 122,500,000 new ordinary shares of the company in two phases, said Gihan Cooray, group vice president / chief financial officer, in a letter to CSE chief regulatory officer Renuke Wijayawardhane.

Text of the letter:

The Board of Directors of John Keells Holdings PLC (“JKH”; the “Company”) has decided to raise funds through a private placement for a maximum cumulative amount of Sri Lankan Rupee Equivalent (LKR) $ 80 million to the Asian Development Bank (“ADB”) through the issuance of up to 122,500,000 new ordinary shares of the Company in two phases, collectively the “Proposed Private Placement”, which will represent a dilution maximum post-issue of 8.5%.

The proposed private placement would consist of an initial issue of common shares (“Initial Placement Shares”) for an initial issue size of the LKR equivalent of US $ 50 million (“Phase 1”). Upon issuance of the Initial Investment Shares, the Company will also issue to ADB non-negotiable / non-transferable options (“Options”) which will allow ADB, at its option and discretion, to subscribe for new ordinary shares. additional Company (“Option Shares”) within 12 months from the date of subscription for the initial placement Shares, for an investment amount of up to the LKR equivalent of 30 million USD (“Phase 2”).

The issuance of shares under the proposed private placement is subject to the approval in principle of the Securities Exchange Commission and the Colombo Stock Exchange (“CSE”), the issuance and listing of such shares, the Company obtaining approval of shareholders at an extraordinary general meeting, approval of the AfDB Board of Directors and compliance with regulatory requirements applicable to the parties.

The main features of the proposed private placement are presented below.

Investor: Asian Development Bank

Phase 1:

▪ Issue size Equivalent in LKR of USD 50 million

▪ Issue price LKR 154.50 per share (the closing market price on November 19, 2021).

The issue price corresponds to a premium of approximately 10 percent over the 90-day volume weighted average price of LKR 141.00 per share.

▪ Initial placement shares Number of shares obtained by dividing the LKR equivalent of USD 50 million by the issue price of LKR 154.50 per share.

The current stated capital and number of outstanding ordinary shares of the Company are Rs. 63,121,732,310.83 and 1,319,776,451 ordinary shares, respectively.

Company n ° PQ 14

The number of shares to be issued would depend on the exchange rate in effect on the date of subscription. For example, if the exchange rate of LKR 202.192 / USD on the date of this announcement remains at the time of subscription, this will amount to 65,434,304 Initial Placement Shares, resulting in a post-issue dilution of 4.7% in Phase 1.

▪ Options The maximum number of Options to be issued will be in the ratio of 3 Options to 5 Initial Placement Shares, subject to being within the threshold of Total Placement Shares as indicated below.

For example, if the number of initial investment shares is 65,434,304, ADB will be entitled to 39,260,583 options, which, if exercised in full, will result in an additional post-issue dilution of 2.8 percent, bringing the total post-issue dilution to 7.3 percent.

Phase 2 (in the event of exercise of the Options):

▪ Equivalent issue amount in LKR up to USD 30 million (subject to the maximum number of shares to be issued to ADB as indicated below)

▪ Exercise price of the option Volume-weighted average price of the ordinary shares of the Company listed on the CSE during the 90 calendar days ending immediately before the date of exercise of the option. The option exercise price is subject to a minimum of LKR 165.00 per share and a maximum of LKR 200.00 per share.

▪ Option Exercise Period The Options will be exercisable for a window of 3 months after completion of 9 months from the date of subscription of the Initial Placement Shares. This right will expire 12 months from the date of subscription for the Initial Placement Shares.

▪ Option Shares Each Option will be convertible into an Option Share during the Exercise Period, provided that the Total of the Placement Shares is below the threshold, as indicated below, which will not exceed a dilution ceiling. post-issue 8.5 percent. The number of Option Shares will also be capped at a total ADB investment not exceeding USD 30 million, which would be converted into LKR at the exchange rate in effect at the time the Options are exercised.

Private placement offered with both phases (in case the options are fully exercised)

▪ Total number of investment shares: up to a maximum of 122,500,000 new fully paid ordinary shares to be issued by the Company under phases 1 and 2, collectively.

The Initial Placement Shares and the Option Shares will both rank pari passu with the existing ordinary shares of the Company.

▪ Maximum Post-Issue Dilution: Up to a maximum post-issue dilution of 8.5 percent of Common Shares under Phases 1 and 2, collectively.

The flexibility to issue shares up to a maximum of 122,500,000 shares is due to the fact that the size of the issue depends on the exchange rate in force at the time of subscription in both phases, and the price of The exercise of the option is variable (within the range of LKR 165.00 and LKR 200.00) at the time of exercise under phase 2.

The proceeds from this transaction will be used to support the company’s balance sheet in order to finance its investments in the “Keells” Supermarket business, which includes the long-term outlet expansion plan, including construction and equipment, start-up costs and construction and equipment of the supporting logistics infrastructure to facilitate this.

Company n ° PQ 14

In addition, the Proposed Private Placement will offer the Group the flexibility and agility necessary to finance its investments in an optimal manner, while providing additional support to the Group’s liquidity position, in particular in terms of additional leeway to manage the investments. foreign currency commitments of major projects such as the integrated “Cinnamon Life” complex and the West Container Terminal in the port of Colombo. In addition, given the AfDB’s investment mandate under which private sector projects must have clear development impacts and positive externalities, particularly in environmental, social and governance (“ESG”) aspects, JKH will leverage the technical expertise and advice of the AfDB to further improve and strengthen the Group’s existing ESG processes and frameworks to achieve the best benchmarks. The Group believes that the partnership with an internationally renowned financial institution such as the ADB, especially at this stage, is a vote of confidence for JKH and the country.

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