Laugfs Gas PLC announces new restructure aimed at profitability

Laugfs Gas PLC will be segregated with three out of its six subsidiaries to be individually listed on the Colombo Stock Exchange (CSE) from April 1 this year. Following the un- relatable existence of businesses within the conglomerate, the decision has been taken by the board of directors approving the restructuring initiative in a move towards profitability.

Laugfs Power Ltd, Laugfs Leisure Ltd and Laugfs Eco Sri will be separately listed on the CSE to maximise the valuation of each unit, Chairman of Laugfs Gas PLC, W. K. H. Wegapitiya told the media on Tuesday at a briefing held at the Hilton Colombo residencies.

Mr. Wegapitiya said, “The restructuring of the company after strategically re-aligning the group will be beneficial to the shareholders and prospective investors. When Laugfs Gas PLC was listed on the CSE, many local and for- eign companies were eyeing to invest. Unfortunately we had our own legacy issues that discouraged foreign investors to associate with us. Within our group there were unrelated businesses. When energy companies approached they felt no interest about the other sectors such as leisure, power, emission, and so on. There were debates within them where we couldn’t give the highest benefit to our shareholders. We looked at various options and we wanted to change the structure making it more attractive to others.” The restructuring will maximise the valuation, he added.

He also mentioned that investors prefer to go into specific business streams particularly energy which has multiple earnings. Segregation will enable Laugfs Gas PLC to specialise in specific areas, not only in energy, but power, leisure and so on that will stand alone as separate entities. “We are going to benchmark with other LPG companies in the region. The company will remain with its own synergetic and strategic businesses within it. After segregation, those who own shares of the holding company will equally have the same amount of shares in the individual companies as well. There will be more benefits to our shareholders,” Mr. Wegapitiya noted.

The restructuring is advantageous to prospective investors and the value will be reflected in the CSE. The reason for this being so strategic and significant is because in the LPG business the value chain is from well to flame. Whoever has the strength and dominance in all these sectors will be competitive, stressed Mr. Wegapitiya.

He also noted that Laugfs Hambantota terminal will be commissioned by the end of April or beginning of May this year. Almost 80 per cent of the construction is completed, stated Mr. Wegapitiya.

Laugfs Gas PLC Director H. A. Ariyaratne during the briefing mentioned that Laugfs Leisure Ltd is not making great profits as of today. “Leisure should become a profitable industry to the company from 2020 onwards. It will take some time for this sector to make profits while also there are few other properties in the pipeline apart from the existing Anantaya Resort and Spa in Passikuda and Chilaw.”

Mr. Wegapitiya firmly stated that the holding company will not sell any of the shares. “We have no plans to sell the shares of the company no matter how much of restructuring we have to go through.”

He also noted that there will be a unified pricing formula for LPG in the next two to three months.

Mr. Wegapitiya stressed that renewable energy is a highly profitable business but a difficult market to enter. “We have the largest solar power plant set up and commissioned in Hambantota. We are adding more in Sri Lanka and also in other Asian markets. We are now exploring and discussions are underway.”