Parquet readies to return to production on October 1

Parquet (Ceylon) Limited, the long troubled wooden flooring manufacturer, is gearing to return to production on October 1 under new management controlled by the Ceylon Theatres group of companies.

Lanka Walltiles and Lanka Tiles group under the Ceylon Theatres umbrella will acquire at least 37% of Parquet’s issued capital of Rs. 16.6 million, Mr. Mahendra Jayasekera, CEO of the ceramics segment of the Ceylon Theatres group said yesterday. The group with its friends and associates are expected to take 64% of Parquet’s equity.

The Sinha Weerasekera family which founded Parquet as well as Western Cork, a British firm that had long supported the troubled company which was among the wooden flooring pioneers in Sri Lanka have agreed to renounce their entitlements under a forthcoming rights issue to the Ceylon Theatres group.

Jayasekera also said that Western Cork which had advanced US$ 375,000 to Parquet has agreed to write-off $ 255,000 of this sum and collect its balance debt via a discounted product buy-back arrangement.

This entails reducing the price of every square metre of flooring purchased by Western Cork by 40 US cents.

"They have agreed to take our total production for one year. It would take at least four years for us to settle the remaining debt through the discounted product sale arrangement we have reached," Jayasekera explained.

He said that the Parquet factory which has been closed since April after 230 employees were dismissed over a bonus dispute was now being cleaned up and the plant and equipment being made ready to meet the October 1 deadline for resuming production.

Sawing of timber has already commenced and the new management is hopeful that they could run the factory with 70 employees by increasing automation.

Ceylon Theatres Chairman Anthony Page is expected to be the new chairman of Parquet while Jayasekera will be managing director.

According to Parquet’s most recent interim financial statement, a loss of Rs. 6.3 million had been incurred in the quarter ended June 30, 2003, up 29% from a loss of Rs. 4.9 million a year earlier.

The company’s earnings per share during the quarter was a negative Rs. 3.81, up from a negative Rs. 2.96 a year earlier while its net assets per share were a negative Rs. 32.93, up from a negative Rs. 14.66 during the first quarter of the previous year.

The Parquet share traded at a high of Rs. 5 and a low of Rs. 2.75 during the quarter under review. This compared with a trading range of Rs. 3.25 to Rs. 1.50 a year earlier.