PAKISTAN - Maple Leaf plans to raise Rs4.3bln through rights issue

Maple Leaf Cement (MLCF) plans raising around Rs4.3 billion through a right issue to partially finance its additional dry process clinker production line being setup at a cost of Rs23 billion, a bourse filing said on Tuesday.

The company will issue a total of 65.966 million shares in the ratio of 12.5 shares for every 100 shares held at a price of Rs65/share. As of August 15, 2017, the company’s share was trading at Rs94/share.

To meet the increasing demand for cement and maintain its share in the growing market, the board of directors decided to set up an additional dry process clinker production line-3 of 7,300 tpd to enhance the grey cement capacity up to 18,000 tons per day at the existing plant site.

The total project cost is estimated at Rs23 billion, which is expected to commence trial production in the first half of year 2019. Funds are required to partially finance the expansion project through shareholders' equity, whereas the rest of the project cost will be met through borrowing and internal cash generation.

The funds from 12.50 percent right shares will contribute towards the completion of expansion project, whereas the overall revenue will increase considerably with resultant increase in profitability of the company, thereby enhancing the expected returns to the valued shareholders.

MLCF expects its sales revenues to gradually surge to Rs38.8 billion by the year 2021 from Rs24.03 billion in 2017, while net profits are expected to surge to Rs8.57 billion by 2021 from Rs4.75 billion in 2017.

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