November 15, 2021 (MLN): Unity Foods Ltd on Monday announced that it plans to raise Rs5.4 billion through a right issue of two hundred million shares at a price of Rs27 per share in order to meet the increased working capital needs of the company, according to a notice published on the PSX.
In their meeting held on Nov 13, 2021, the Board of Directors of the company decided to increase the paid-up share capital of the Company from Rs9,940,500,000 to Rs11,940,500,000 by the issue of 200,000,000 ordinary shares.
The ordinary shares will be offered to the shareholders of the Company in proportion to the number of shares held by each shareholder (i.e. as right shares) at a price of Rs27 per share (i.e at a premium price of Rs17 per share), in the ratio of approximately 20.12 Right Shares for every 100 existing ordinary shares of Rs10 each held (i.e., approximately 20.12%) against payment to the Company of the price of the share subscribed, which shares shall rank pari passu in all respects with the existing ordinary shares of the Company (“Right Issue”).
The share transfer books of the Company will be closed from December 13, 2021, to December 17, 2021 (both days inclusive) to determine the entitlement of the Right Shares.
The quantum of the Right Issue is approximately 20.12% of the existing paid-up capital of the Company i.e., approximately 20.12 right shares for every 100 ordinary shares held by the shareholders of the Company.
With regards to the risk factors associated, the Right Issue has been announced at a price below the current market price; hence there is minimal investment risk associated with the Right Issue. Furthermore, the Right Issue is to be underwritten as per the requirement of the applicable regulations.
The issue is being made at a premium of Rs17 per share to par which reflects c 30.96% discount to the last 6 months volume-weighted average share price. A discount to market price is also in line with current market practice, the notice said.
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