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EAP group exits from subsidiaries to save two of its finance companies

Crisis ridden, Edirisinghe Trust Investment Finance Limited (ETIFL), a licensed non-bank finance institution will be resurrected with the capital infusion of USD 17 million by a Singapore based Investment Fund Company protecting the disgruntled depositors, Sunday Times reported quoting official sources.

EAP Group has entered into a deal with Singapore based Blue Summit Capital Management Private Limited to sell some of its major subsidiaries to this Singaporean firm at a price of USD 75 million with the sole aim of protecting over 35,000 depositors of ETIFL and Swarnamahal Financial Services PLC.

The Singapore Investment Fund has already remitted USD 17 million to tackle the liquidity issue of ETIFL and tackle the wearing away of capital.

According to a due diligence conducted by relevant parties, the gap indicated in ETI’s balance sheet was Rs17.5 billion at end-March 2017; and this company has 90 percent stake in Swarnamahal Financial Services, which has a negative book value of 1 billion.

EAP Group is expected to receive USD 43 million by the end of April and the balance USD 15 million by mid May this year to finalise the deal of exiting the ownership of their subsidiaries namely Swarnamahal Financial Services PLC, EAP Films and Theatres Private Limited, 40 percent of EAP Broadcasting Company Limited and Swarnamahal Jewellers, the high official source said.

40 percent of EAP Broadcasting Company, which owned the Swarnavahini TV station and several Sinhala and English radio channels, would be sold due to the state restrictions imposed on foreigners to hold shares in media companies.

The deal with Singapore based Investment Fund Company was made by EAP Group following extensive negotiations between the two parties. Central Bank has restricted the withdrawal of maturing deposits and renewal of such deposits of ETI Finance and Swarnamahal Financial Services for six months with effect from January this year.


The CB has placed troubled ETI Finance and Swarnamahal Financial Services PLC of ETI Group under a three-member expert panel comprising former Central Bank Assistant Governor Sepala Ratnayake, former Bank of Ceylon Senior Deputy General Manager P.A. Lionel and former Bank of Ceylon Assistant General Manager H.M. Thilakarathne.


Since then EAP Group has tried to find an investor to infuse fresh capital into two finance companies high official said adding that the owner of a local TV station was among them but their offers were not sufficient to meet the requirement.

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