Maple Leaf to raise Rs4.28b in right issue

Will offer 65.9m new shares to shareholders at Rs65

KARACHI: Maple Leaf Cement Factory, the fourth largest cement-maker in Pakistan, has decided to raise Rs4.28 billion from the Pakistan Stock Exchange (PSX) to partially finance the cost of an additional dry process clinker production line.

According to a company notice sent to the PSX on Tuesday, the board of directors has recommended to issue 65,966,740 right shares to the existing ordinary shareholders of the company at a price of Rs65 per share (including a premium of Rs55 per share) in proportion of 12.50 right shares for every 100 ordinary shares held.

With 8.4% share in grey cement market and more than 90% share in white cement market, the company has the highest average retention rate in the industry along with the third lowest cost structure, according to a BMA Capital report.



An efficient sales mix along with the ability to operate beyond 100% in the backdrop of healthy local demand and upcoming 40-megawatt coal-based captive power plant through its subsidiary will reduce power cost and provide tax benefit to the company.

Moreover, the 2.3-million-ton expansion project to defend market share, which will come online by the fourth quarter of fiscal year 2019, was also going to help the company, the report added.

The total project cost is estimated at Rs23 billion, which is to be funded by 47.8% debt, 33.5% internal cash generation and 18.7% right share issue.



The company expects its net sales and earnings to have four-year (FY18-21) compound annual growth rate of 13% and 16% to Rs38.9 billion and Rs8.6 billion, respectively.

Published in The Express Tribune, August 16^th, 2017.

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