KARACHI, May 13: Security Leasing Corporation has announced that the company board had approved 50 per cent right issue of Preference shares, subject to the approval of SECP. “These preference shares carry 15 per cent cumulative dividend with conversion option and redemption at the option of the company as well as the investor,” the company stated in a press release.

The company said that the issue of shares would be put up before the shareholders for approval at the extraordinary general meeting on May 31, and that the right shares would be subscribed by the end of June 2002. The company observed that the proceeds from right issue of preference shares would enable expansion of leasing operations and also to meet the capital requirement under the rules for leasing companies.

Security Leasing said that its public offer of ordinary shares in March 1995 and public subscription to the company’s Term Finance Certificates in December 2001, were both oversubscribed.

The stock market listing shows that the company has paid-up capital of Rs100 million, which would increase to Rs150 million following the proposed right issue at 50 per cent. That would still leave the company short of Rs50 million from the statutory requirement of Rs200 million in minimum paid-up capital for leasing companies. The Board did not elaborate on Monday, but it looks like, based on the results of the current offer, a second equal tranche of preference stock may be at the back of the mind.

That also seems plausible since earlier on July 30, 2001, the company had sought approval of company shareholders to issue 10 million ‘redeemable convertible cumulative preference’ shares of Rs10 each. Shareholders had approved the amendment in Memorandum and Articles of Association and those changes had also been approved by the SECP by September 2001, but according to the company sources, the issue of preference stock was deferred due to events following 9/11.