February 6, 2019 (MLN): The majority shareholder of Orix leasing Egypt SAE (OLE), Al Hail LLC (Al Hail), has stated its plans to expand OLE’s equity base. However, Orix Leasing Pakistan’s (OLP) Board of Directors is of the opinion that economic conditions in Egypt and OLE’s financial position do not warrant further investment in OLE.
While Orix Leasing Pakistan and Orix Corporation, Japan, each holds 920,000 shares (23%) in Orix leasing Egypt SAE, Al Hail LLC holds 2,160,000 shares (54%) which makes it the majority shareholder.
In view of OLP’s reluctance to invest further in OLE, Al Hail has offered to purchase OLP’s shares in OLE at an offer price of Egyptian Pounds (EP) 30.90 per share (approximately Rs. 241 per share) for a total consideration of EP 28.4 million (approximately Rs. 221.4 million). As a result, the Board of Directors has considered Al Hail’s offer and OLP’s Board has decided to disinvest OLP‘s holding in OLE.
Al Hail has also offered similar terms to Orix Corporation to purchase their shares in OLE. Orix has accepted this offer in principle.
The disinvestment will result in an after tax loss of approximately Rs. 68.6 million which may change depending on foreign exchange rates prevailing at the time of the transaction’s execution.
The expected loss is primarily due to recognition of unrealized foreign exchange losses on long term investments caused by a 48% devaluation in the Egyptian Pound in financial year ended June 31, 2017.
The Board’s decision is subject to the approval of the Securities and Exchange Commission of Pakistan (SECP).
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