Islamabad September 10 2024: Fauji Fertilizer Company Limited, the largest fertilizer plant of Pakistan, decided to acquire control of Agritech Limited having accumulated losses of PKR 24.6 billion, according to company filing to the exchange.
Share price of AGL hit upper cap after the announcement at Pakistan Stock Exchange. The company having accumulated losses of PKR 24,642 million is currently trading at market capitalization of PKR 14,999 billion.
“The Board of Directors of Fauji Fertilizer Company Limited (the Company) has approved the acquisition of shares and control in Agritech Limited (AGL) by the Company along with any associated company(ies), any other shareholder(s) of the Target or any other person/entity, led by the Company” states notification.
“Subject to completion of necessary corporate and regulatory formalities where required, the Board authorized the issuance of a Notice of Intention to AGL, PSX and SECP, appointed Integrated Equities Limited as Manager to the Offer (MTO), and sanctioned the commencement of due diligence and negotiation of acquisition terms” the notification added.
Agritech Limited was incorporated in Pakistan on 15 December 1959 as an unlisted Public Limited Company under the repealed Companies Act, 1913 (now the Companies Act, 2017). The principal business of the Company is the production and sale of Urea and Granulated Single Super Phosphate fertilizer.
Auditors have also raised concern about the AGL’s ability to operate as going concern which states as “Notwithstanding the matter discussed in Basis for the Qualified Conclusion section, the Company during the half year ended 30 June 2024 has incurred loss before tax amounting to PKR 1,266 million and, as of that date, its current liabilities exceeded its current assets by PKR 24,624 million, and its accumulated loss stood at PKR 24,642 million. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Our conclusion is not qualified in respect of this matter.”
AGL is implementing a Scheme of Arrangement (‘Scheme’) approved by the Lahore High Court to restructure its overdue long-term debts and related markups. It is in the process of issuing preference shares (shariah compliant/conventional) and Privately Placed Term Finance Cerficates (PPTFCs)/Sukuks in pursuance of the Scheme. During the period, the Company disbursed PKR 500 million to short-term lenders on a pro-rata basis to settle the outstanding principal portion of these short-term liabilities. The Company also intends to use its current liquidity for the partial redemption of the allocated preference shares amounting to approximately PKR 2 billion, subject to necessary approvals, which are in process.
In 2024, AGL has successfully converted preference shares issued to Bank Alfalah Limited into ordinary shares. Accordingly, the issued, subscribed and paid-up capital has increased from 392,430,000 shares to 424,645,119 shares.
