StanChart halts Olympia Mills to start its ventures
Olympia Spinners and Weaving Mills alleged that Standard Chartered Bank has stopped it to restart its production as per plan as the company has been denied to issue Non Objection Certificate (NOC) which it claimed as illegal.
M Waqar Monnoo, CEO of Olympia Spinners and Weaving Mill wrote a letter to Security and Exchange Commission recently stating the present situation of the company which is hit by financial losses but alternate debt arrangement of the banks have been done successfully besides Standard Chartered Bank of Pakistan, which is the only hurdle in its way to restart its production as per plan.
"The company is pursuing SECP for granting permission to enter into diversify business, which is pending due to nonissuance of NOC by Standard Chartered Bank illegally, the letter said to SECP and Pakistan Stock Exchange said.
Earlier, the company filed a suit in High Court of Sindh and obtained Stay Order against settlement of cross currency swap contracts of Rs 830.5 million entered into by the company with Standard Chartered Bank.
The company mainly contests on provision of unwinding cost calculation, mismatched dates of settlement with its long term loans repayments and other procedural non compliance of foreign bank.
No provision of unwinding cost of cross currency swap contract of Rs 293.35 million has been made in the financial statements, as the legal opinion is favorable, the company financial report claimed.
The spokesman of Standard Chartered Bank his company always seeks to adhere to the highest standards of compliance with international and country laws and regulations.
Banks are required by both international and local laws and regulations to maintain strict confidentiality, he added.
Olympia Mills successfully negotiated with three banks for agreement over Debt-Asset Arrangement Swap as per law of State Bank of Pakistan (SBP) in last one year.
Accordingly, the company swapped its 10.72 Acre land and Building against Rs 420 million loan with United Bank Limited. It swapped its debts of Rs 210 million with Askari Bank through Plant and Machinery. It has also settled its loans of Rs 80 million with Soneri Bank with Plant and Machinery.
The settlement of loans have given a heave of relief to the company which is planning to start different businesses through renting out its properties and maintaining its cash flows however it needs its support from foreign bank.
Olympia Mills has ceased the production since May 21, 2014 and incurred a loss for the year ended June 30, 2015 of Rs226.003 million and as of that date, reported accumulated losses of Rs 1.555 billion.
The company's current liabilities exceeded its current assets by Rs 1.083 billion. The annual report stated that "the management closed the factory from May 2014 for repair and maintenance and non availability of cheap cotton. The management did not find it feasible to run the mill without the availability of adequate working capital and curtail further losses."
The lenders had stop financing of working capital but the company is continuously engaged with its bankers for restructuring of its liabilities on much softer terms and conditions so that all overdue payments will be settled.
We have temporarily closed the factory since May 2014 for repairs and maintenance and awaiting for availability of cheap cotton. This will curtail further losses. The management is working very closely with the bankers for restructuring of finances and very hopeful for positive feedback.