According to a bourse filing, Engro Polymer & Chemicals (EPCL) today announced that the Board of Directors of the company in order to “partially fund the expansion cost of the PVC plant to cater for an additional 100,000 MT & VCM Plant Debottlenecking of 50,000 MT per annum, has approved the increase in the ordinary paid up share capital of the company from Rs. 6,635mn/- to PKR 9,089mn/- by issue of a further 245,454,545 ordinary shares of the company of PKR 10/- each, to be offered to the shareholders of the company in proportion to the number of shares held by each shareholders.”
Furthermore, the company seeks to offer these shares “in accordance with the provisions of Section 83 of the Companies Act, 2017, at a price of PKR 22/- share, inclusive of a PKR 12/- premium per share, in the ratio of approximately 37 right shares for every 100 existing ordinary shares of PKR 10/- each (i.e. 37%), against payment to the Company of the price of the shares subscribed by the shareholders, which shares will rank pari passu in all respect with the existing ordinary shares of the company.”
According to the company’s financial plan for the expansion, it requires a total of PKR 7,600 million for the Expansion Project. Of the total amount it seeks to raise Rs. 2,200 million in the form of borrowing from banks, whereas, it plans to raise sums worth Rs. 5,400 million from a 37 percent Right Issue i.e. issue of 245,454,545 ordinary right shares of PKR 10 each at a price of PKR 22 per share (inclusive of premium of PKR 12 per share).
According to the notice, the purpose of the right issue is “to expand its PVC production capacities, the Board of Directors decided for the expansion of the PVC plant to cater for an additional 100,000 MT and VCM plant debottlenecking of 50,000 MT per annum. The estimated overall cost of said expansion is approximately PKR 7.6 billion, which is intended to be partially funded through issuance of right shares of approximately PKR 5.4 billion.”