SECP allows KESC to issue right shares

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Friday allowed the Karachi Electric Supply Company to issue 14.5 per cent right shares to its existing shareholders.

An SECP official said that the commission had also directed the two majority shareholders Abraaj and the government of Pakistan to provide an undertaking on their part that the right shares would be subscribed by them and the unsubscribed would also be subscribed by the two partners.

The official said that the KESC management had provided the undertaking and the same from the government of Pakistan was expected soon. The SECP had also relaxed the condition for issuing right shares twice in a year and the KESC was allowed to issue 2.50 billion ordinary shares or 14.50 per cent right shares at the price of Rs3.5 per share.

After receiving the permission from the SECP, the KESC informed the Karachi Stock Exchange that its share transfer books would be closed from January 2 to 8, 2010 to determine shareholders entitled for the right shares.

The KESC stated that the right shares would be offered to the shareholders whose names would appear in the register of members at the close of business on January 1, 2010.

The power utility said that first right issue would increase its paid-up capital to over Rs66 billion and the second issue would bring it to Rs75 billion.

The company expected to generate Rs8.75 billion from the issue to fund its transmission and distribution network expansion plan, which would help it to reduce line losses.

‘This will improve operational and financial viability of the company and increase the profitability,’ the KESC said.

The expansion and improvement plan is expected to reduce the company’s losses to Rs2.26 billion in the next fiscal year and the KESC management expects a turnaround by the 2011-12, with a profit of Rs8.27 billion.

The management has ambitious plans to increase the profits by three folds to Rs23.61 billion by the fiscal 2012-13.

KESC was incorporated in 1913, and it was nationalised in 1952, KESC was privatised in 2005. KESC while the current management took over in 2008. KESC is listed at all three of stock exchanges of the country.