Hela Apparel Holdings PLC is advancing plans to raise up to Rs. 4.4 billion from a strategic investor as part of a critical turnaround strategy aiming to stabilise its balance sheet following widened losses in the first half of the financial year.
The company confirmed that shareholder approval has already been obtained for the proposed capital infusion, which is expected to materialise in the second half of the 2025/26 financial year.
In addition to the negotiations with prospective strategic investors for an investment ranging between Rs. 3 billion and Rs. 4.4 billion, the company’s existing shareholders are anticipated to inject approximately Rs. 1 billion. These funds are earmarked to support the company’s subsidiaries, several of which were flagged in June 2025 for facing a “serious loss of capital” situation where net assets had fallen below stated capital.
The capital raising efforts come as the group faces continued financial headwinds. According to interim financial statements for the six months ended September 30, 2025, Hela reported a consolidated loss of Rs. 4.1 billion, widening from a loss of Rs. 2.98 billion in the same period the previous year. Group revenue for the six-month period also declined to Rs. 32.3 billion compared to Rs. 42.98 billion a year earlier, reflecting a challenging global operating environment.
Despite the operational difficulties, the group has made significant progress in restructuring its debt profile. Hela announced the successful completion of a restructuring arrangement for Rs. 15.1 billion in bank borrowings during the first half of FY 2025/26.
The revised terms convert these facilities into a nine-year term loan with a one-year grace period for principal repayment, carrying an interest rate of SOFR + 1 percent for the first two years. This follows a Rights Issue concluded in October 2024, which raised Rs. 1.6 billion to settle banking facilities for its subsidiary, Foundation Garments (Pvt) Ltd.
The details of the group’s recovery plan emerged alongside the release of its delayed Annual Report for 2024/25, following a notification from the Colombo Stock Exchange (CSE) on November 28, 2025, warning of a potential trading suspension if the report was not submitted by early December.
The company’s auditors had issued a disclaimer of opinion on the annual accounts, citing material uncertainties regarding the group’s going concern status due to a net liability position and overdue payables, though the Board remains confident that the restructuring and capital injection will drive recovery.
As of September 30, 2025, the company’s shareholding structure was led by Lesing Hela Limited, which held a 48.43 percent stake, followed by Tars Investments Lanka (Pvt) Ltd. with a 15.15 percent holding. P.L.D. Jinadasa held a direct and indirect stake of approximately 11.34 percent, while D.E.H. McVey held 1.87 percent. Hatton National Bank PLC / Sri Dhaman Rajendram Arudpragasam accounted for 0.89 percent of the shares, with the public holding standing at 24.39 percent.
Hela Apparel Holdings was listed on the Colombo Stock Exchange on February 7, 2022.
Source: Daily Mirror