EAP group holds talks with Malaysian investor to sell its companies
The EAP Group is in negotiations to sell its businesses-- including its broadcast and media arms--to a Malaysian investor, multiple sources confirmed.
The prospective buyer, Straits Grid Pte Ltd, has been in talks over the past few months, the sources said, adding that negotiations were fronted for the Malaysian party by a businessman named Jaya Sudhir Jayaram. Straits Grid’s parent org anisation is Ke ppel Corporation. The EAP Group comprises several companies including Swar namahal Jewellers, EAP Films and Theatres, Swarnavahini,
Shree FM, Ranone FM, E FM and Swarnamahal Financial Services. The concern has been on the market for some time. Repeated attempts to contact EAP Chairman Mano Tittawella failed.
Earlier this year, Laugfs Holdings Ltd also made a failed bid for the group while Asia Broadcasting Corporation, which owns Hiru Fm and Hiru TV (among others), too expressed interest.
Laugfs Chairman W.K.H. Wegapitiya told the Sunday Times that he made a proposal six to seven months ago to the Central Bank of Sri Lanka (CBSL) as “the EAP Group is now under its supervision”. He claimed that his offer was rejected by the CBSL due to “higher political interference”.
But CBSL sources indicated that the offer failed as Laugfs had sought to borrow money from the Central Bank for the deal. “He asked us for money and we couldn’t agree because the Central Bank’s deposit insurance facility is to bail out depositors, not investors,” they said.
It was not immediately clear how far negotiations between the EAP Group and the Malaysian company have gone. CBSL sources said the regulator’s involvement in the proposed deal pertained to the finance companies that the EAP Group ran-Swarnamahal Financial Services and Edirisinghe Trust Investments. It was not immediately clear if both companies were on the platter, along with the other businesses.
“The Central Bank does not get involved directly in negotiating deals between potential investors and finance companies,” the CBSL sources said. “If there is an offer, the Central Bank’s responsibility is to ensure that the deal is based on realistic valuation of the finance companies’ businesses and investment properties.”
“The Central Bank has to fulfil its responsibilities towards the depositors (of the finance companies) as a regulator of this sector,” they continued. “And we are only concerned the two finance companies, ETI and Swarnamahal. If the sales of the other businesses come into play, the whole deal should yield a value which is in the interest of the depositors.”
The Central Bank will also ensure that monetary transactions for the deal are carried out bank-to-bank. “We are interested in two things,” they reiterated. “Protecting the interests of depositors and seeing that the money involved in the deal is from legitimate sources, not money laundering or terrorist financing.”
Jaya Sudhir Jayaram is a longstanding business partner of R.M. Manivannan, Chairman of Supreme Global Holdings. The 46-year-old Mr. Manivannan became widely known under the former administration for his forays into satellite technology. He claimed to have launched Sri Lanka’s first satellite with Chinese collaboration. It turned out to be a joint-branding of a Chinese satellite where his company, SupremeSAT, leased part of its “communications payload”.
Mr Jayaram was most recently listed as a director--along with Mr Manivannan--of Horton Square (Pvt) Ltd, a proposed mixed development project in Horton Place. Mr Jayaram’s address entered in the company registration from was in the British Virgin Islands and common to hundreds of other offshore entities from around the world.
As previously reported by the Sunday Times, Mr Jayaram has a significant internet footprint. He is best known for being the Malaysian businessman named in the United Nations investigation into the Iraqi oil-for-food scandal. The Sunday Times read the Independent Inquiry Committee report online. Mr Jayaram is alleged, along with two others, to have revived Mastek Sdn Bhd (a long-dormant Malaysian company) to pay the regime of Saddam Hussein up to US$ 10mn in illegal surcharges to clinch Iraqi oil contracts for another company Mastek was intermediary to. He is said to have been a key player, something he rejected by heaping blame on another partner.
The report cites bank records as showing that, at one time, Mr Jayaram formed a ‘shelf company’ called Keppel Oil to avoid currency restrictions imposed in Malaysia. It was used to transfer 2.3 million Euros to an account of Iraq’s State Organisation for Marketing Oil between April and July 2001. A shelf company (in contrast to a shell company) is “a business entity that has been formed and properly maintained, but which has never conducted any business”.