Synthetic Product Enterprises to issue Right Shares to establish a new manufacturing facility in Karachi

September 18, 2020 (MLN): The Board of Directors of Synthetic Products Enterprises Limited in its meeting held on September 17, 2020, has decided to increase the paid-up share capital of the Company by issue of a further 3,981,978 ordinary shares.

These shares will be offered to the members as Right Shares, at a price of PKR 32 per Share inclusive of a premium of PKR 22 per Share, aggregating to PKR 127,423,296.

The quantum of the Right Issue is 4.5% of the existing paid-up capital of the Company i.e.  approximately 4.5 right shares for every 100 ordinary shares held by the shareholders of the Company.

Meanwhile, it is pertinent to mention that the main purpose of Right issue is to establish a new manufacturing facility in Karachi in order to, inter alia, enhance the profitability of the Company and to improve returns to the shareholders.

Furthermore, the proceeds from the Right Issue will primarily be utilized for the meeting the CAPEX requirement of the Company.

This right issue is expected to positively impact the profitability, thereby enhancing expected returns to the shareholders, the company said in a notification to Exchange.

While with regards to risk factors associated with the Right Issue, the notification highlighted that the Right Issue has been announced at below current market price, hence, there is minimal investment risk associated with the Right Issue. Furthermore, the Right Issue is to be underwritten as per requirement of the applicable regulations.

Moreover, the notice highlights a justification of Right Issue at premium by stating that the current market price of share is much higher than the offered price and the price being offered to the shareholder for this right issue is at a significant discount.

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