KARACHI, Sept 19: First National Equities Limited (FNE) claimed on Monday that they had accumulated as many of the shares in Pioneer Cement as to be able to win majority seats at the elections to the Board of directors in October.

Ali S.Malik, chairman FNE told Dawn that his firm had first acquired 10 per cent of the shares in Pioneer Cement in August this year and that was disclosed to the company and the stock exchanges under ‘Chapter II of the Listed Companies (Substantial Acquisition of Voting Shares and Take-overs) Ordinance, 2002’. Ali Malik further claimed that his firm was close to accumulating 25 per cent of the stock in the target company.

Senior officials at Pioneer Cement, when queried, strongly refuted that the sponsor Noon Group could loose control of the company. Officials, who asked not to be named, said that they had been informed of the 10 per cent share acquisition by FNE, but neither had the corporate raiders got anywhere near the 25 per cent holding, nor would they be able to seat their nominees on the Board. Elections to the Board are held every three years; the last was held on October 28, 2002.

It is difficult to make out whether it is this assumed substantial acquisition bid by (FNE)-—a brokerage firm— or the current colossal demand in the cement sector that has sent the price of Pioneer Cement stock scurrying up by 38.6 per cent or Rs8 from Rs20.70 on Sept 1 to Rs28.60 on Sept 19 (13 trading sessions).

Market had been rife with rumours about the possibility of a proxy war between the two parties, but the knowledge was confined to bigger players and some of the analysts. Small investors mostly thought the rise in the price of share in Pioneer to be in line with general demand of the cement stocks. While that may be true, small investors are generally unaware of the other possible contributing factor in the unusual heat up of the company stock.

The chairman, FNE, said that it was not their intention to ‘take over’ the company but to give the input to improve the cement company’s performance. He also claimed that his firm had earlier acquired Trust Leasing & Investment Bank Limited, but did not jeopardize the working of that Board either.

The Pioneer officials preferred to dismiss the subject as mere gossip and to talk more of the company’s activities. The company’s new plant with the capacity to produce 4,300 tons of clinker per day was expected to be commissioned at end of October or early November, they said. Much of the work was completed except that Wapda had not yet energized the grid station. The company’s plant had operated at 115 per cent capacity during the year, against the industry’s average of 96 per cent. They stated that Pioneer was centrally located which placed it in advantageous position in terms of exports to both Afghanistan and Iraq.

With regard to non-payment of dividend by the company, which had last disbursed 5 per cent cash in 2002, the Pioneer officials expressed confidence that a dividend would materialise next year (year ending June 30, 2006). Paid-up capital of the company stands at Rs954 million with 95.4 million outstanding shares of Rs10 each. Exactly who owns how many of those shares would be clear only at the elections to the Board, due in October.