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KARACHI, Jan 27: Three term finance certificates of a textile group will be launched for public subscription this week. The TFCs will be listed on Lahore Stock Exchange.
The Gulistan Group will launch the term finance certificates of Gulistan Textile Mills; Gulshan Spinning Mills and Paramount Spinning Mills on January 29-30. The banks handling the TFCs are United Bank Ltd, Muslim Commercial Bank and Metropolitan Bank.
The TFCs are being launched for balance sheet restructuring of the group companies and to finance import of machinery to expand production base. The finance raised through the TFCs would also help the group convert short term loans into a mix of short-term and medium-term loans, a senior official said.
The group’s finance manager Saifee Zakiuddin told Dawn that the public offering will be worth Rs 80 million each for the first two TFCs and Rs 40 million for the third one. He said the pre-initial public offering of the three TFCs had already been held. He said that Rs 320 million worth pre-IPO of both Gulistan Textile Mills and Gulshan Spinning Mills and Rs 160 million of Paramount Spinning Mills were held late last month. The total size of the three TFCs thus comes to Rs 1 billion of which pre-IPO of Rs 800 million has been achieved and public offering of Rs 200 million will be held later this week.
FINAL RATING: : JCR-VIS credit rating company has assigned final rating of single A to the proposed TFC issue of Rs 400 million each of Gulistan Textile Mills Ltd and Gulshan Spinning Mills Ltd, says a press release.
The TFC issue of Rs 200 million of Paramount Spinning Mills Ltd (also a member of the group) has got the final rating of A plus. “The outlook on these ratings is stable.”
Gulistan Group has an asset base of more than Rs 8 billion and its annual sales amount to Rs 7.5 billion. The cumulative exports of the group companies stand at Rs 5 billion, an official said.
TFCs MARKET: Bankers and stock brokers say textile mills have been consistently issuing term finance certificates to meet their financial requirements directly from the debt market instead of going to banks. They say raising finance through TFCs establishes the credit worthiness of the companies in the debt market thereby enhancing the performance of its stocks and diversifies borrowing sources. The textile sector invested Rs 40 billion plus mostly in BMR projects in 18 months to June 2002. Textile millers say the largest chunk of this amount was raised through TFCs.
