KESC to issue right shares

A decision to issue 7.8 per cent right shares has been made by the Karachi Electric Supply Company (KESC), according to a report sent to the Karachi Stock Exchange.

The decision was taken after the net equity of the KESC finished at a negative Rs 525 million as accumulated losses outstripped paid up capital and reserves this year.

The rights shares will give ordinary shareholders the option to purchase 39 ordinary right shares for every 500 ordinary shares held by the shareholders at Rs3.50 per share. The decision is subject to the approval of the Securities and Exchange Commission of Pakistan (SECP).

The raised capital is expected to finance network expansion and recuperation and meet working capital requirements, said the report.

Although the KESC has posted a loss of Rs14.6 billion this year, it expects to reverse its fortunes within two years by posting a profit of Rs8.3 billion for fiscal year 2012 and increase profits to Rs30.6 billion by 2014, according to the same report. The loss also represented a decrease of 5.4 per cent from last year’s loss of Rs15.5 billion. Sale of energy for KESC also increased 21.4 per cent from Rs58.1 billion in 2009 to Rs70.5 billion in 2010.

Published in The Express Tribune, August 28^th, 2010.