Karachi November 18 2024: The Organic Meat Limited announced right share of 20.2% at a premium of PKR 17 per share to reduce high cost short term debt and meet working capital requirements of the company.
The quantum of the Right Issue is approximately 20.203% of the existing paid-up capital of the Company i.e. approximately 20.203 right shares for every 100 ordinary shares held by the shareholders of the Company immediately prior to the close of the share transfer books of the Company.
The Company shall issue 30,000,000 (Thirty million only) ordinary shares, at a price of PKR 27/- (Pak Rupees Twenty seven) per share, aggregating to PKR 810,000,000/- (Pak Rupees Eight hundred and ten million only).
The purpose of the Right Issue ito reduce the short-term high-cost debt of the Company, meet increased working capital requirements of the Company and its animal fattening business as well as investments in new tripes and red offals processing units. These measures will position the Company to profitably meet current and future demand of its products with provide a more balanced capital structure for future growth.
The proceeds from the Right Issue will be to significantly reduce the short-term high-cost debt of the Company, meet increased working capital requirements of the Company and investment in a new tripes cooking and red offals processing unit.
The Right Issue is expected to positively impact the profitability, thereby enhancing expected returns to the shareholders.
The Right Issue of the Company is being carried out at a price which is less than the current share price in the market and hence there is no major investment risk associated with the Right Issue. The substantial shareholders and Directors of the Company have confirmed that they shall subscribe to (or arrange the subscription of) their respective right entitlements, while the balance portion of the Right Issue shall be fully underwritten as per requirements under applicable regulations. Normal risks associated with the business will remain; however, the Company is well placed in the market, which will help to mitigate such risk factors.
The Right Issue is being carried out at a premium. Considering the current market price of the Company, the premium charged over the par value is justified and is also in line with the prevailing market practice. In fact, the Right Issue price constitutes approximately 25% discount to the prevailing market price.
