KARACHI: Masood Textile Mills Limited — a Faisalabad-based vertically-integrated textile company, listed on the stock exchange — is back in the news.

The financial results of the company released on Monday included under the head ‘any other information’, the appointment of Miss Chen Yan, a nominee of Shanghai Challenge Tex­tile Company Ltd, Shanghai, Peoples Republic of China as the new director, in place of Shahid Iqbal who resigned.

Masood Textile Mills (MSOT) had seized the spotlight for some time earlier in October when another Chinese company, Shandong Ruyi Science and Technology Group Co Ltd, pulled back from its offer to acquire 31.2 million shares of the company.

A filing at the market at the time stated that the conditions required to be fulfilled under the Share Purchase Agreement (SPA) between the sellers and the acquirers for the transaction were not fulfilled within the agreed timeline, which was why the completion of the transaction was no longer possible under the SPA terms.

The intended acquisition was approximately for 52 per cent of the 60m paid-up shares of the company. The mainland Chinese firm’s desire to acquire MSOT, first announced on Dec 5, 2013, had created a great deal of excitement in the market. And the abrupt announcement in Oct this year that the transaction had been called off caused more furor.

MSOT is among profitable listed companies. It paid dividends to shareholders at a uniform rate of 15.5pc for each of the last three years (2011-13). The company’s total assets stood at Rs19.3 billion at the close of FY13. Against the paid-up capital of Rs995m, the company held Rs4.11bn in reserves, which produced the break-up value per share of par value Rs10 at Rs51.33.

Neither the company nor its lead manager offered any clue as to what may have soured the earlier transaction with the Chinese company Shandong Ruyi Science and Technology Group Co. Ltd, nor has the company provided the ‘material information’ to the market about its supposed deal with Shanghai Challenge Textile Company Limited.

Sources suggest that the substituted Chinese firm — Shanghai Challenge Textile Company Limited is taking up 24.36pc stake in Masood Textile through the acquisition of 14.6m shares.

The regulators should take notice and seek clarification from the company lest the distasteful speculation in the stock that had carried the stock price of MSOT from Rs48 per share before the announcement of the previous proposed transaction to Rs145, recording a stunning gain of Rs93, or 169pc, is repeated. Already on the first day of the half-baked information on Monday, the stock price of Masood Textile hit the ‘upper circuit’ adding the maximum permissible 5pc to its value to close at Rs128.15.

Published in Dawn, December 16th, 2014