The Board of Directors (BoD) of Pak Suzuki Motor Company (PSMC) has decided to purchase all outstanding shares of the company and delist from the Pakistan Stock Exchange (PSX), the company said in a notice to the bourse on Thursday.
This development comes following a meeting of the BoD of PSMC on Thursday to consider delisting shares under section 5.14, Voluntary Delisting rules of the PSX Rule Book.
“The BoD of the company has resolved to delist the company from PSX under rule 5.14 of Voluntary Delisting rules of the Rule Book for which the company shall submit a formal application to the PSX for Suzuki Motor Corporation,” read the notice.
The company said that its majority shareholder has been authorised to buy-back ordinary shares held by the minority shareholders of the company for an extent and at a price to be determined in accordance with the regulations or as may be determined by the PSX or the Securities Exchange Commission of Pakistan for the purposes of voluntary Delisting of the Company from the PSX.
As per the notice, the PSMC attributed the decision to delist to several factors.
“The operations of Pak Suzuki resulted in losses in 2019, 2020 and 2022. It has also resulted in a loss up to the 3rd quarter of this year; from 2019, dividends have not been paid to shareholders except for 2021; the current share price of Pak Suzuki is at a historically low level and the number of daily transactions/sales are limited,” it said.
“In view of the foregoing, the sponsor and majority shareholder, Suzuki Motor Corporation, intends to obtain full ownership of Pak Suzuki by purchasing all outstanding shares and securities held by minority shareholders, in order to increase ownership and delist the company from the PSX.
“Considering the unfavorable situation for minority shareholders, it would be beneficial for them to be offered a fair exit,” it said
PSMC, however, stated that within Suzuki’s global strategy, Pakistan remains one of the most important markets and the company is convinced of the future potential of Pakistan.
The announcement resulted in the company’s share price – under pressure for months – hitting its upper limit during trading on Thursday.
Last week, PSMC, in a notice to the bourse, informed that it will review and consider the majority shareholder’s intent to purchase all outstanding shares of the company and delist from the PSX.
“The decision to delist suggests the company is not seeing an incentive to remain listed at the bourse as the compliance cost is high,” Fahad Rauf, Head of Research of Ismail Iqbal Securities Limited, told Business Recorder back then.
“The company likely believes its shares are available at a cheap valuation so they are intending to buy it,” he said.
Citing a drop in sales and high finance costs, PSMC earlier announced losses to the tune of Rs9.68 billion in the first six months of FY2022-23.
During the course of the year, the company has made numerous announcements of shutdown of both its vehicle and motorcycle plants in Pakistan.
The loss did not surprise analysts as Pakistan’s auto sector has been facing challenges on several fronts, including high energy costs, political instability, and an inability to secure letters of credit for imports amid a severe dollar shortage.
A number of automakers including PSMC, Indus Motor Company, and Honda Atlas have announced temporary shutdown of operations.
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