Fitch: Distilleries on watch

Fitch Ratings said it placed Distilleries Co. of Sri Lanka plc's national long-term rating of AAA(lka) on Rating Watch negative.

The negative watch follows a restructuring in the group, Fitch said.

In August 2016, Melstacorp, a 100% subsidiary of Distilleries, issued new shares to Distilleries paid with a 24.8 billion in Sri Lankan rupee promissory note.

Shareholders will soon swap their Distilleries shares for shares in Melstacorp, after which Distilleries will become a fully owned subsidiary of Melstacorp, the agency said.

The negative watch consider a potential for an increase in financial risks to Distilleries due to the risk of higher dividends to the new parent company, which could weaken credit metrics, Fitch said.

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