July 13, 2022 (MLN): Suhail Jute Mills Ltd (PSX: SUHJ) is exploring the financial and legal ramifications of a proposal received by an interested party to set up an Industrial Zone under the CPEC umbrella, the progress report issued by the company on Wednesday noted.
During the previous quarter, the company had explored the viability of entering into joint ventures with potential buyers. The company has been encouraged by the favorable feedback from potentially interested parties and remains actively engaged with them, the report added.
While updating its current status of the commercial operations, the management stated, “The restart of commercial operations hinges entirely upon our ability to raise adequate financing for working capital and the discharge of outstanding obligations to creditors, principal among which is the settlement of obligations to institutions who have secured Decrees from the Courts.”
The principal sponsors continue to substantially increase their financial stake in the company by injecting funds to keep the company afloat during the entire time it has remained non-operational and are obviously most interested in being able to restart operations so as to recoup their investment, it added.
The report further noted that the company has surplus assets that have become available for disposal, as a consequence of the merger of (Colony) Sarhad Textile Mills Ltd, with and into, Suhail Jute Mills Limited. The company owns a fully functional Jute Manufacturing facility, which has been maintained in running order.
The existing unit will be capable of generating revenue, once working capital becomes available, enabling commercial production to be recommenced.
Since the finalization of the merger, the company has made strenuous efforts to sell such surplus assets so as to raise the required amount of funding.
However, it has not been able to secure suitable terms for the same, particularly the front-loading of the consideration for the sale of surplus assets.
It is to be appreciated that much of the period in question has been negatively impacted by the depressed economic conditions and the effect of the Covid19 pandemic.
Moreover, because part of the available assets includes land, the company also faced issues relating to the end-use of the land, which has further shrunk the pool of potential buyers.
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