KARACHI, Dec 14 Nishat Mills Limited, the largest composite textile mill in the country, announced on Monday that the company had entered into an agreement with AES Pakistan Holdco Limited to acquire 'substantial majority shareholding' in two thermal power plants owned by the AES.

Those included AES Lalpir (Private) Limited and AES Pak Gen (Private) Limited.

Both the AES thermal power stations were stated to be located in Mahmood Kot, Muzaffargarh “adjacent to each other” and were identical in design as both were constructed by the same EPC contractor, i.e. Nichiment of Japan and MIU.

The name plate capacity of Lal Pir was said to be 362MW and that of Pak Gen 365MW.

Both plants, with the expected life of 35 years, were brought online with three months in between - in late 1997 and early 1998.

The announcement by Nishat Mills at the stock exchanges, in compliance with the listing Regulation No 28 and clause (xxiii) of the Listing Regulation 37 under Code of Corporate Governance (in respect of provision of Material Information) stated that registered office of AES Pakistan Holdco Limited was located in Grand Cayman, Cayman Islands.

The company stated that the site of the two plants had “more than sufficient space” available to cater for a possible expansion in operations.

It noted that an expansion would have no significant issues in power evacuation given the proximity to the national grid. “Similarly, Lal Pir's existing fire water system could provide support for a further expansion,” the Nishat Mills announcement concluded.

Analysts said that the acquisition was of significance as it would ensure a reasonably uninterrupted power supply to Nishat.

On a day of bullish fervour at the market, investors gave warm reception to the announcement.

In her market closing comments, Faiza Naz, analyst at JS Global Capital, wrote “Post this announcement, we saw a positive rally in Nishat Mills Limited (stock) and by the end of the session the share price surged by 5 per cent with 6.6 million shares traded.”

AHBL share tender offer

The market is expecting from the new owners of Arif Habib Bank Limited (AHBL) a 'tender offer' for the minority shareholding at a price of Rs9 per share before Dec 27, 2009. Suroor Investments had signed an agreement with AHBL on June 30, 2009 for acquisition of major shareholding (59.4 per cent) at that price. The public announcement was made on July 1.

A report released by brokerage firm, Topline Securities, on Monday explained that the Takeover Ordinance in Pakistan was promulgated in 2002, called Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance 2002.

According to that document, all listed companies acquiring more than 25 per cent shares were obligated to make a public announcement of offer of minority stake as well, mainly to provide fair and equitable treatment to all shareholders.

The rules, first issued in 2002, have since seen several amendments.

But in compliance with the latest regulations issued through notification (dated Aug 29, 2008), the acquirer of majority stake in a company has to make a public announcement within 180 days of announcing the intention to acquire the control of the target company.

The SECP for a genuine reason can extend that time by 90 days. And the acquirer is bound to buyback at least 50 per cent of the remaining stocks offered. The rules also stipulated that the public offer price should not be less than the acquisition price or higher price arrived through few other formulas as mentioned in the regulation.

Analysts at Topline Securities calculated that since the agreement between Suroor Investments and Arif Habib Bank was signed on June 30, 2009 and the public announcement was made on July 1, to comply with the regulation, “a public offer has to be made within 180 days which according to our calculation is expiring on Dec 27, 2009.”

They reckoned that Suroor would have to acquire two, out of four minority shares, presented on tender offer. “After the announcement of acquiring more than 25 per cent shares, the public offer has to be issued within six months as explained before. The payment to shareholders who will tender their shares has to be made within three months. Thus, the whole process has to be completed in about nine months after the announcement of acquisition.

“In case of AHBL, six months have already gone by and now after the official public offer is made, the minority shareholder who will accept the offer will get money back by March 2010, unless some changes in timeframe are approved by the SECP for a valid reason,” said the Topline analysts.

In anticipation of the tender offer, the turnover in AHBL has received a big boost. Although a small and relative inactive stock, it was the heaviest traded scrip last Friday and saw fifth highest volume of 10 million shares on Monday.

Analysts at Topline explained that investors took heart from earlier similar offers in case of PPTA and Bosicor Refinery.

The stock in PPTA had shot up by 120 per cent in one year and Bosicor had rallied by 7 per cent, compared to a 2 per cent decline in the benchmark KSE index, analysts said.