ISLAMABAD:
The Pakistan Engineering Firm Restricted (PECO) Board of Administrators (BoD) has determined to challenge shares to present shareholders to lift Rs284.5 million to fulfill the corporate’s funding necessities, blaming the previous managing director (MD) for the present monetary disaster.
In a press assertion and a discover to the Pakistan Inventory Trade (PSX), the board introduced its resolution for the rights challenge at a worth considerably decrease than PECO’s market worth. The Board of Administrators of PECO, a public-listed firm, additionally permitted 5 years of delayed monetary accounts, which can be introduced for approval at a basic physique assembly of its shareholders scheduled for February 17, 2025, as per a press assertion.
“This can be a tragic instance of the harm brought on by unchecked mismanagement and neglect, however right now marks a turning level,” mentioned Mirza Mahmood Ahmad, Chairman of the BoD. “By approving these accounts, we’re re-establishing transparency, accountability, and a basis for PECO’s revival.”
The monetary disaster follows years of catastrophic mismanagement underneath former MD Mairaj Anis Ariff, a nominee of the Ministry of Industries and Manufacturing (MoIP), whose tenure noticed the corporate incur losses exceeding Rs1.2 billion, in keeping with the board.
Throughout his tenure, Ariff reportedly disregarded directives from the Ministry of Industries, the Securities and Trade Fee of Pakistan (SECP), and the Ministry of Legislation. He allegedly barred board members from coming into firm premises and operated PECO’s financial institution accounts with single-signature authority in 2018.
The corporate’s accounts remained unaudited for over 4 years, with no Annual Common Conferences (AGMs) held and no tax returns filed. This negligence led to PECO’s placement on the PSX’s defaulters’ record and plunged the corporate into default with suppliers and monetary establishments.
Irreplaceable property deteriorated or have been squandered, commerce receivables value a whole lot of tens of millions have been consumed, and stock-in-trade and collectors’ balances have been used to fund losses, halting enterprise operations totally, mentioned the assertion. Defaults to monetary establishments and suppliers additional tarnished the corporate’s creditworthiness, forcing it to retrench roughly 450 employees, leaving a workforce of simply 34 workers.
Following the elimination of Ariff in 2022 via intervention by the PDM authorities led by then-Prime Minister Shehbaz Sharif, and the restoration of the elected board, vital progress has been made, in keeping with the assertion. The board has since labored to reconstruct monetary information, rebuild techniques, and restore PECO’s popularity. To deal with the liquidity disaster, the board introduced the rights challenge to stabilise operations and supply shareholders with a possibility to help the corporate’s turnaround.
The funds raised can be used to settle overdue liabilities, together with restoration fits from suppliers and monetary establishments. The quantum of the rights challenge is 50% of the present paid-up capital, in keeping with the inventory market discover. One bizarre proper share for each two bizarre shares held by the shareholders of the corporate instantly previous to the shut of the share switch books can be issued.
The shares, with a face worth of Rs10, can be supplied at Rs100 every, together with a premium of Rs90 per share, elevating a complete of Rs284.5 million. The provide worth is considerably decrease than the market worth to encourage shareholder participation within the firm’s revival.
The board determined that the proceeds from the rights challenge will primarily be utilised to handle the corporate’s working capital wants, cost of utility payments, overdue liabilities of suppliers and banks, and restarting operational actions via crucial steps. It mentioned these measures will make sure the continuity of operations and compliance with statutory obligations. “These steps are important to making sure PECO’s revival, stopping future abuses of energy, and restoring the corporate to its former glory whereas producing vital employment alternatives,” the board acknowledged.
Moreover, funds can be allotted for the settlement of overdue commerce money owed, sustaining day-to-day administrative capabilities, and investing the remaining quantity in income-generating avenues to help ongoing operational bills.
The supplied worth is considerably decrease than the market worth, representing a considerable low cost to the market worth. The low cost to the market worth has been supplied to make the rights challenge engaging and accessible to shareholders, guaranteeing their participation in supporting the corporate’s capital wants, in keeping with the board.