Islamabad November 5 2024: Mughal Iron & Steel Industries Limited, the largest rebar seller in Pakistan, is issuing right shares with 50 times higher voting power rights, according to company filing to the exchange.
The Board of Directors of the Mughal Iron & Steel Industries Limited, has approved to increase the paid-up share capital of the Company from PKR 3,356,339,330/- to PKR 3,856,339,330/- by issue of further 50,000,000 Unlisted Ordinary Class-C shares of the Company having face value of PKR 10/- each, to be offered by way of right to the members of the Company, holding ordinary shares, at a value of PKR 30/- per share (i.e. inclusive of a premium of PKR 20/- per share) in ratio of approximately 14.90 Ordinary Class-C right shares for every 100 existing ordinary shares of PKR 10/- each (i.e @ 14.90%) held as at the close of the business, prior to the closure of share transfer books, against payment to the Company for the price of the Ordinary Class-C shares subscribed.
In voting at any General Meeting, in respect of any matter, Ordinary Class-C shares carry fifty voting rights per each Ordinary Class-C share.
The dates of closure of the Share Transfer Books of the Company, to determine the entitlement of Ordinary Class-C Right Shares will be communicated in due course after finalization of the Right Share – Offer Document (Schedule-1) in accordance with the provisions of the Companies (Further Issue of Shares) Regulations, 2020.
The existing working capital of the Company is financed by mix of bank and debt instrument borrowings. The purpose of the right issue is to raise equity for injection in existing working capital of the Company to partly replace the debt financed portion with equity financing. This aligns with the Company’s broader strategy to fortify its financial position in order to enhance profitability and, consequently, provide greater shareholder return.
This will result in savings in the form of reduction in overall markup cost, injection of permanent capital, increase in equity, improved cash flows, and lowering of leveraging. Further, the Ordinary Class-C shares have no right to dividend, therefore, there will be no dilution of Earnings per share as well, which will instead improve on account of markup savings.
Ordinary Class- C shares will be unlisted, have no right to any dividend / bonus shares declared by the Company from time to time. However, these shares are participatory in surplus assets in case of liquidation of the Company. However, non-dividend/ bonus feature is compensated by the voting rights that it entails.
