KARACHI, Aug 30: Alhamd Textile Mills Limited and Shaigan Electric & Engineering Co. Ltd. informed the Karachi Stock Exchange that they intended to seek voluntary delisting.

Alhamd Textile -the spinning mill at Multan, which had created corporate history in the country, by making the fist successful repurchase of its own shares (also called the ‘treasury stock’), said this week that after the second buy-back by the company, the outstanding shares of the company had reduced to 6.41 million shares only, out of which the sponsors held 6.2 million shares leaving balance of 219,100 shares with all other shareholders which was just 3.4 per cent of the total. “Hence the company is now a family-owned company instead of a public company.

“Other reasons that the company gave for its decision to quit the stock market included: The share turnover in the market was nominal as the public holding was only 3.4 per cent of the total shares; the cost of maintaining membership at the Stock Exchanges was quite high without any significant benefit to the shareholders; as per directive of the SECP, the company was obliged to join the CDC which would result in additional cost to the shareholders; company being now a family-owned entity, the application of the code of corporate governance under the stock exchanges listing rules would be cumbersome and a burden on the efficient performance of the company; the shareholders had been paid Rs21 per share by the company under the two successful buy backs whereas the company was offering Rs35 per share which was 67 per cent higher than the buy back price.

The offered price was also better than the benchmark price required under Stock Exchange Listing Regulation No. 32-A.

Meanwhile, the board of directors of Shaigan Electric & Engineering Company Limited resolved in their meeting on August 26 that the company should apply to the KSE for grant of approval to de-list the company under the voluntary de-listing regulations. The board further resolved that subject to the approval of the KSE for delisting of security of the company, the board/sponsors including their friends, relatives and associates, being the majority shareholders, intended to buy-back shares of general public, NBFIs and insurance companies at a price to be based on the three year average market price or at a price agreed between the company and the KSE.

Giving the reasons for delisting, the board stated that over the last decade the company had suffered adversely from tough competition of smuggled spark plugs, which was the sole item of production. The company carried accumulated losses of Rs7.5 million on its balance sheet at June 30, 2002. “Keeping in view the accumulated losses, the company is not in a position to pay any return to its shareholders in the foreseeable future,” the directors said.

In a third case, the KSE informed Maqbool Company Limited that the Voluntary Delisting Committee of the Exchange had approved the offer of sponsors to purchase shares at minimum purchase price of Rs102 per share subject to purchase of at least 75 per cent or 106,725 shares out of the total shares (142,300) outstanding with the shareholders other than sponsors to qualify for delisting.

In recent times dozens of companies have sought delisting from the stock exchanges after sponsors bought back shares held by minority shareholders. It has to be admitted that in most cases, regulators have done well to broker good prices for stocks, enabling small shareholders to get rid of lame-ducks.