The Saudi Pak Leasing Company Limited (SPLC), one of the country’s leading leasing firms, has no money to clear its financial liabilities amounting to over Rs 528.208 million, it emerged Monday. Also, the company is planning to double its current authorized capital of Rs 1 billion through the creation of 100,000,000 preference shares of Rs 10 each. The SPLC owes over Rs 333.2085 million and Rs 195 million, respectively, to the Saudi Pak Industrial and Agricultural Investment Company Limited (SAPICO) and the Bank of Khyber (BOK) on account of subordinated loan and term loan. “Due to the current financial position it was unlikely for the company to meet its financial obligations towards its lenders,” conceded Muhammad Ali Siddiqui, SPLC’s company secretary, in a formal communiqué with the Karachi Stock Exchange under Section 160(1)(b) of the Companies Ordinance, 1984. The leasing giant is, therefore, all set to convert the respective loans of the SAPICO and BOK into preference shares.
“The company has negotiated with lenders to convert their respective loans into preference shares,” said Siddiqui. The secretary said after “successful” negotiations with the lenders, the Board of Directors of the SPLC, in its June 11th meeting, had considered and approved the Term Sheet for the purpose. The company tends to issue non-voting, non-cumulative convertible unlisted preference shares to the two lenders. The SPLC proposes to issue 33,320,850 and 19,500,000 preference shares worth Rs 10 each to SAPICO and BOK, respectively.
The leasing firm would issue one preference share for every Rs 10 of debt financing for a five year period with an option to convert the preference shares into the ordinary ones. To be issued, tentatively, on July 31, the preference shares would be convertible if the lenders so will. The listing of the unlisted shares would also be optional for the lenders who may like to list the same at time of conversion.
The move, however, requires the consent of the company’s ordinary shareholders, the front and apex regulators and the Board of Directors in the face of a resolution. The Board Extraordinary General Meeting (EOGM) would be held on the 31st of this month in the federal capital Islamabad to discuss the two prominent agenda items. To facilitate the issuance of preference shares, the SPLC propose to increase its authorized capital from the current Rs 1 billion (divided into 100,000,000 ordinary shares of Rs 10 each) to Rs 2 billion.
The capital would be doubled through the creation of some 100,000,000 preference shares each valuing Rs 10. “The Board of Directors has already approved the increase in authorized capital,” the company secretary said.
