Fauji Foods to offer further 780mn ordinary shares as Right issue

September 6, 2021 (MLN): The Board of Directors of Fauji Foods Limited (FFL), in its meeting, held virtually on September 4, 2021, has decided to increase the paid-up share capital of the Company by the issue of a further 780,794,596 ordinary shares, having face value of PKR 10 each, as Right Shares, aggregating to PKR 7,807,945,960.

As per the notice issued to PSX, the quantum of the Rights Issue is 97.19916% of the existing paid-up capital of the Company i.e. 97.19916 right shares for every 100 ordinary shares held by the shareholders of the Company.

This Right Issue will be utilized to reduce debt levels, manage and optimize working capital in the most appropriate manner.

The benefits of the issue to the company and its shareholders are:

• Reduction in debt level will mitigate the adverse impact on the profitability on account of financial charges
• Optimized working capital will ensure smooth operations of the Company
• The Company will maintain a healthy debt to equity ratio

The Right Issue of the Company is being made at a price that is less than the current share price in the market and hence there is no major investment risk associated with the Right Issue. Normal risks associated with the business will remain, the notice said.

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