KARACHI, June 3: The members of Security Leasing Corporation Limited (SLCL) approved the 50 per cent right issue of preference shares at the company’s extraordinary general meeting (ExGM) on May 31, a press release by the company said.

The preference shares carry minimum cumulative dividend of 15 per cent per annum and have options for redemption as well as conversion into ordinary shares at lower of break-up value or market value plus 40 per cent of the difference between the break-up value and the market value. “The right issue is subject to the approval of Securities and Exchange Commission of Pakistan and is expected to be subscribed by the end of July 2002,” the press release stated.

In a separate notice to the Karachi Stock Exchange on Monday, the company mentioned that the rights issue of preference shares, class I, would be in the sum of Rs50 million. The call option can be exercised anytime after 12 months from date of issue and put option at six months notice in three equal trenches, between 30th and 36th months; between 42nd and 45th months and between 54th and 60th month from the date of issue, with option for conversion into ordinary shares at market value if preference shares not redeemed on due date after notice. It said that one director on the board would be elected by the preference shareholders.

Following the completion of the right issue of preference shares, the SLCL’s equity base would increase to Rs200 million, thus meeting the minimum capital requirement of the SECP for leasing companies. The equity base consists of paid-up capital, share premium, statutory reserves, distributable reserves and un- appropriated profits, but excludes other non-distributable capital reserves.

Merrill Lynch of the US and Commonwealth Development Corporation of the UK are the principal shareholders of Security Leasing, holding 57.5 per cent equity between them. The company had commenced operations in May 1995 and has since posted a record of consistent profitability. Security Leasing’s initial public offering in March 1995 and a Rs200 million Term Finance Certificates issue in December 2001, were both over-subscribed.