The Board of Directors of Fauji Foods Ltd. has decided to increase its paid-up share capital by issuing a further 780 million (780,794,596) ordinary shares with a face value of Rs. 10 each as Right Shares aggregating to Rs. 7.80 billion (Rs. 7,807,945,960)
According to a notification to the PSX, these right shares will be offered to the members in the proportion of 97.19916 Right Shares for every 100 ordinary shares held i.e. 97.19916%. This will be 97.19916 at a price of Rs. 10 per Right Share.
The decision was made in a virtual meeting on 4 September.
The Board of Directors stated that it has considered all the requirements of the Companies Act, 2017 and the Companies (Further issue of Shares) Regulations, 2020, and they will be duly complied with by the company.
The purpose of the right issue is to reduce the current debt levels, manage and optimize the working capital of the company.
The benefits of the issue to the company and its shareholders are:
- Reduction in debt level will mitigate the adverse impact on the profitability on account of financial charges.
- Optimized working capital will ensure smooth operations of the Company
- The Company will maintain a healthy debt to equity ratio
The Right Issue of the Company is being made at a price that is less than the current share price in the market and hence there is no major investment risk associated with the Right Issue. Normal risks associated with the business will remain, said the notice.
Additionally, Ali Asrar Hossain Aga and Basharat Ahmad Bhatti were approved as the directors of the company, authorized to issue/sign the letter of offer in compliance with the applicable laws.
The board also resolved the draft of the circular to accompany the letter of offer (attached as Schedule-3) pursuant to Section 83(3) of the Companies Act, 2017, as placed before the directors and approved it, and the Chief Executive Officer of the company was singly authorized to sign the circular on behalf of all the directors.