Citing excessive regulations: Ayesha Textile Mills to delist from PSX

Company would buy back 55 shares owned by general public

Our Correspondent July 27, 2016

Company would buy back 55 shares owned by general public. PHOTO: AFP

KARACHI: Sponsors of Ayesha Textile Mills are going to buy back shares of the company from the general public for at least Rs1,185 per share, a securities filing said on Wednesday.

The company intends to delist from the Pakistan Stock Exchange (PSX) partly because “meeting excessive regulatory and reporting requirements” as a publicly traded entity serves “no purpose” anymore.

As much as 90% shareholding of Ayesha Textile Mills is controlled by its sponsors and directors. The rest of the outstanding shares are mainly held by National Bank of Pakistan (NBP). Almost no trading takes place in the Ayesha Textile Mills stock because of its minimal free float, which are outstanding shares freely available for trading.

The general public owns only 55 shares out of total paid-up capital of 1.4 million shares of Ayesha Textile Mills. But under new rules, listed companies with the free float of less than 25% will be required to increase it to at least one-fourth of their capital within three years and maintain it at that level thereafter.

Free float is also a measure of liquidity: a company’s stock becomes less liquid, or illiquid, when limited availability of tradable shares makes it difficult for the general public to buy or sell it on the exchange.

Ayesha Textile Mills says it faces liquidity issues and does not carry out its own revenue generating activities being a holding company.

“Right now issuance of new shares to the general public is not feasible,” it said.

The company has called an extraordinary general meeting of its shareholders on August 19 to approve a special resolution to buy back outstanding shares currently owned by any investors other than its sponsors and their relatives for its voluntary delisting from the PSX.

The share price was determined as per the intrinsic value per share calculated by Tariq Abdul Ghani Maqbool and Company.

For the nine months ending March 31, Ayesha Textile Mills posted a loss of Rs173.3 million as opposed to a loss of Rs93.9 million for the comparable period of the preceding fiscal year.

Published in The Express Tribune, July 28^th, 2016.

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