Deeply troubled Vanik Incorporation Ltd., has now made new proposals to meet its massive unsecured debenture obligations and a meeting of debenture holders will be held on Friday to obtain their views on these.

The debenture holders rejected Vanik’s previous proposals presented to them on March 6 and the company agreed to withdraw these and make a new offer which has now been conveyed to the trustee who has in turn communicated these with his own comments to the debenture holders.

Vanik has defaulted on interest dues and redemption of approximately 9.4 million 100-rupee debentures carrying an interest rate of 15% per year but is making every effort to meet its obligations by expanding its viable businesses and realising assets.

Under the new offer, Vanik has proposed that the 15% rate be applied to all interest payments up to the date of the implementation of the alternative proposal. Thereafter, this rate be reduced to 12% until the date of the full redemption of the capital.

The company has offered that interest accrued till Dec. 10, 2002 be paid in three equal instalments at the end of October, November and December this year and interest dues up to December 10, 2003 be paid in equal quarterly instalments the following year with this process continuing until 2005.

Thereafter, the payment will be accelerated with interest due up to Dec. 10, 2005 to be paid in full in the first quarter of 2006 and interest due up to Dec. 10, 2006 to be fully paid in the first quarter of 2007.

Capital repayment will begin in 2007 with interest due up to Dec. 10, 2007 to be paid in full on that date together with one fifth of the capital. This process to continue annually thereafter until all dues are paid off on Dec. 10, 2011.

The Trustee, Secretarius (Private) Ltd., has told debenture holders that the present proposal seeks to reduce the interest rate from 15% to 12% from this year; stagger interest payments through the following year with four equal quarterly instalments; reschedule capital repayments due in November this year to 2007; and finally pay off debenture holders in full by 2011 as opposed to 2007 under the present instrument.

He has stressed that the debentures are unsecured and their holders rank lower than Vanik’s statutory creditors and secured creditors at any call on the company’s assets.

The trustee has also invited views and comments on these proposals that the debenture holders may wish to make prior to the April 25 meeting at the Organization of Professional Associations in Colombo on April 25.