The management of Fauji Foods Limited (FFL) has planned to borrow Rs. 2.35 billion from its stakeholders on the directives of the board of directors to meet the working capital requirement of the company.
According to the stock filing, the board of directors of Fauji Foods Limited held its meeting and approved that the company is and is hereby authorized to borrow the total amount of Rs. 2,350,000,000 as a loan from Fauji Foundation and, to this end, to enter into the Shareholder Loan Agreement with Fauji Foundation for the said Loan.
The loan shall be an unsecured subordinated shareholder loan and shall be disbursed in one or more branches as may be agreed with Fauji Foundation. The loan shall be for the tenor ending on the second anniversary of the date of disbursement of each tranche. The loan shall carry mark-up at the rate of 6 Month KIBOR +2 percent and will be payable on demand, according to the stock filing.
Fauji Foundation shall have the option to convert the said loan into equity at any time by written notice at par or lower value as set out in the Shareholder Loan Agreement and subject to necessary approvals. Moreover, the transaction will be subject to the approval of the Securities and Exchange Commission of Pakistan.
Fauji Foods Limited is a Pakistani food company that is a subsidiary of the Pakistani conglomerate company Fauji Foundation. The company was acquired from Noon Pakistan Limited in 2015 and relaunched and introduced products such as Nurpur, packaged milk, and Dostea (tea whitener).
In the first half of 2022, the net sales of the company stood at Rs. 4.7 billion compared with Rs. 4.49 billion during the corresponding period of last year. The company was able to sustain revenue in an unprecedentedly turbulent time.
However, the loss after tax for the half year increased to Rs. 1.25 billion compared with a loss of Rs. 758 million in the corresponding period of last year.
