KARACHI, Sept 20: The merger of Lease Pak Limited (LPL) with Security Leasing Corporation Limited (SLCL) has been called off, after the two companies failed to reach an agreement over the swap ratio.

That the two companies should have decided to go separate ways after months of merger talks in which the most minute details about who would head what operations had been worked out, goes only to confirm a timeless truth: That there are many a slip between the cup and the lip!

It was in mid-June that the Boards of both companies had decided to amalgamate business. The tie-up was envisaged to result in enhanced capital and improved profitability of the merged company. SLCL has operational base at Karachi, and Lease Pak at Lahore. It was mutually agreed between the two boards that M.R.Khan and Mohammed Khalid Ali of SLCL would continue as chairman and MD, respectively of the merged company, while Lahore operations would be headed by Agha Najeeb Raza of Lease Pak. Plans included expansion of SLCL board to accommodate three directors from Lease Pak. Post merger total assets size of the company had been worked out to exceed Rs1,200 million with equity base of over Rs250 million.

“It would enable the company to tap new opportunities under the forthcoming NBFCs rules, expected to be implemented from July, 2002” was the last optimistic note heard from the company. So what went wrong?

M. Rahmatullah, general manager at Security Leasing Corporation says that the deal went sour because of Lease Pak’s demand to enhance the already agreed swap ratio. He contends that LPL had agreed to a swap ratio of 20 SLCL ordinary shares for 100 LPL ordinary shares, subject to implementation of certain measures (e.g. debt restructuring, rebates and waivers from lenders etc). to improve Lease Pak’s break-up value by August 29, 2002.

“Though these measures had not yet been implemented, LPL decided to demand an enhanced swap ratio of 30 SLCL shares in the form of preference shares carrying minimum dividend redemption options”, says the SLCL general manager who also is the company secretary, adding, “As this demand was not feasible, the proposed merger of the two companies has been called off”.