Faran Sugar Mills plans 14.5m share rights issue to strengthen financials

August 27, 2024 (MLN): The Board of Directors of Faran Sugar Mills Limited (PSX: FRSM) has decided to increase the company's paid-up share capital by issuing an additional 14.5 million ordinary shares, each with a face value of Rs10.

This decision was made during the board meeting held on August 26, 2024.

The quantum of the right issue is approximately 58% of the existing paid-up capital of the company immediately prior to the close of the share transfer books of the Company.

Moreover, the price for each rights share will be Rs35, including a premium of Rs25 per share.

The purpose of the right issue is to timely meet increased working capital requirements of the company and repayment of working capital finance to ease cash flow constraint.

The proceeds from the activity will be primarily utilized for meeting working capital requirements and repayment of working capital finance.

Importantly, the right issue is expected to positively impact the profitability, thereby enhancing expected returns to the shareholders

It is being carried out at a price which is less than the current share price in the market and hence there is no major investment risk associated with the Right Issue.

The substantial shareholders and Directors of FRSM have confirmed that they shall subscribe to (or arrange the subscription of) their respective right entitlements, while the balance portion of the Right Issue shall be fully underwritten as per requirements under applicable regulations.

Normal risks associated with the business will remain; however, the company is well placed in the market, which will help to mitigate such risk factors, the management of the company added.

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