Dandot Cement Company Limited (PSX: DNCC) has proposed converting approximately Rs. 2.47 billion in related-party loans into equity, a move that could significantly strengthen its balance sheet and boost earnings per share, subject to shareholder approval.
According to a notice submitted to the Pakistan Stock Exchange, the company’s board has approved a plan to convert loans obtained from three related parties into ordinary shares under Section 83 of the Companies Act, 2017. The proposal will be presented to shareholders for approval at an Extraordinary General Meeting (EOGM) scheduled for June 24, 2026.
The proposed conversion involves Rs. 735 million owed to Digital World Pakistan (Private) Limited, Rs. 210 million owed to Tetra Engineering (Private) Limited, and Rs. 1.529 billion owed to Calicom Industries (Private) Limited, bringing the total amount to approximately Rs. 2.474 billion.
If approved, DNCC plans to issue up to 121 million ordinary shares against these loans. The company intends to issue up to 37 million shares to Digital World Pakistan, 8.4 million shares to Tetra Engineering, and 76 million shares to Calicom Industries.
According to JS Global Research, the proposed transaction could have a positive earnings dilution-adjusted impact of around 28 percent for shareholders.
The brokerage noted that the loans being converted are interest-free, meaning the transaction is not expected to reduce finance costs but could improve the company’s capital structure and shareholder equity position.
The conversion prices vary by lender. Shares issued to Digital World Pakistan and Calicom Industries will be based on the market price prior to the shareholders’ book closure date plus a premium of Rs. 2 per share, while shares issued to Tetra Engineering will be priced at Rs. 25 per share, including a Rs. 15 premium over the Rs. 10 par value.
The company has authorized its management to seek the necessary regulatory approvals from the Securities and Exchange Commission of Pakistan (SECP) and complete all legal formalities required to implement the transaction if shareholders approve the proposal.