To carry out this intended acquisition, PSO and Shell have already “entered into a preliminary and exploratory discussion”, a notification to the Karachi Stock Exchange said on Wednesday.
Furthermore, PSO has also already requested PRL that “it wishes to carry out a due diligence exercise” for this purpose, the circular further informed.
Currently, Shell has a 30 per cent stake in PRL, the highest shareholding of its issued capital, while PSO has the third largest at 18 per cent. If this purchase of Shell’s shares is carried out, PSO would have a 48 per cent hold over PRL, which apart from being the largest shareholder, would also give it almost half the say in PRL’s running.
Kashif Lawai, the company secretary of PRL, said that all the information that could have been price-sensitive for the company’s shares had been given for the benefit of their shareholders. He said that PRL had taken the action to keep “nothing hidden and all the inside information of the organisation had been shared publicly”.
He said that existing shareholders of the company (namely Shell) would make the final decision and the current PRL management could not really say what the future may be. He said that the entire decision was of Shell and the management had no say whatsoever.
Lawai informed that on its part, the board of directors of PRL had given provisional approval to the due diligence exercise in a meeting held on 30th June.
An official of the PSO said that the state oil company had taken this step keeping long-term goals and achievements in mind. “We have taken a strategic decision as it is very important for PSO to have back-up integration,” she said.
Referring to the Rs128 billion circular debt of PSO, the official said that the circular debt is a temporary issue for the state oil company as the debt is actually the receivables, which PSO hopes will be cleared soon.
She said that the main concern at present is high imports of petroleum products as PSO does not have a local refinery of its own.
PSO provides fuel to 90 per cent of power companies and yet it has no local back-up for its own support, she said.
“If we had a refinery four or five years ago, when we did not have a circular debt, we would not have this major issue due to which we are suffering greatly,” she added.
The official further informed that PSO is discussing seriously and doing its best to buy the shares of Shell in PRL.
However, she further added that the entire process is likely to take five to six months, by which time PSO hopes to clear its circular debt and also succeed in purchasing the greater hold over PRL for its long term benefits.
In the benchmark bourse, the Karachi Stock Exchange, the shares of PRL showed a positive response to the news as its prices inclined by Rs2.77 to close at Rs78.57 on Wednesday, compared to Rs75.80 a day earlier. Interestingly, prices of PSO’s shares reflected a slight decline after closing in at Rs269.29 on Wednesday compared to its opening value of Rs269.68 the same day.
Published in The Express Tribune, July 1st, 2010.
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