KARACHI, May 20: Orix Investment Bank Pakistan Limited announced at the stock exchange on Tuesday that it proposed to raise capital up to Rs500 million by the issue of convertible, non-voting preference shares (preference shares) by way of private placement to institutional and other investors.

Once a very profitable company, Orix Bank was bitten by Callmate Telips. Alleged heavy speculation or a poor decision to invest in the then extremely expensive shares in Callmate Telips was believed to have brought about the bank’s downfall. As the Callmate stock dipped from Rs119 to a token value of around Rs7, the Assets sides of balance sheets of companies heavily invested in CTTL were washed off.

In the Orix Bank notice to the shareholders, the company made an upfront admission: “The deficit on revaluation of securities, based on CTTL share market value at Rs6.81 (price on May 19, 2008) comes to Rs540 million”. The company stated that the deficit on revaluation of securities due to decline in market value of investments, mainly Callmate Telips had been stated below the equity in the financial statements of the company.

“The deficit when routed through profit and loss account will impair the equity,” the company said, which was why it proposed to increase issued, subscribed and paid-up capital of the company by the issue of Preference Shares.

The stock in Orix Investment Bank is currently down in the dump, trading at around Rs7.50. So, could the issuance of preference shares be an attempt by the bank to rebuild its life? If so, it clearly would be a difficult task.

The notice said that the preference shares were “other than by way of rights issue” and made under the provisions section 86(1) of the Companies Ordinance, 1984. The preference shares are proposed to be issued at par value upon such terms and conditions as may be agreed and finalised with the Joint Arrangers, including but not limited to the rate of preferential dividend, convertibility and conversion price.

“The preference shares will be issued subject to approval of the shareholders of the company by way of special resolution and approval of the Securities and Exchange Commission of Pakistan,” the company said.

CALLMATE BOARD TO TAKE MAJOR DECISIONS: Concurrent to the notice of the Orix Investment Bank, the Callmate on Tuesday also made an announcement that certain decisions were proposed to be taken at a meeting of the CTTL Board on May 27.

The company stated that the board would consider the following items: To consider withdrawal of the court case against the SECP; to consider the resignations of directors who have resigned and take action thereupon; to consider resignation of Chief Financial Officer (CFO) and appointment on the resultant vacancy; to consider calling extraordinary general meeting of the company; to place information about legal cases against the company initiated by the banks and others; to place before the board the loan deal to the company with Mybank and to inform the board about progress about the international clearing house of the LDI’s at the PTA.

In February this year, CTTL announced its delayed accounts for financial year 2007. The company posted a net loss of Rs359mn (loss per share Rs5.50) compared with profit of Rs603 million (earning per share Rs9.23), in the year preceding.Seldom has a security fallen from grace as quickly as that of this long distance and international (LDI) private operator in Pakistan.

Market participants say that greed, treachery, conspiracy and lethargy led to the demise of Callmate. But that is another story.