Orix Leasing set to buy Rs 666 million shares to merge StanChart subsidiary
Orix Leasing Pakistan board of directors has approved the amalgamation scheme of Standard Chartered Leasing Company within the company against the share price of Rs 7.88 to Standard Chartered Bank of Pakistan having 84 million shares in its subsidiary.
In an extraordinary general meeting of its shareholders, the leasing company offered share price of Rs 9.85 to minority shareholders including options to be part of a merging company with one share will be equal of their previous 6.42 share.
The minority shareholders include seven investors with stakes of 2,370 totaling 16,590.
Orix Leasing Pakistan signed a sale purchase agreement with Standard Chartered Bank of Pakistan to buy and merge its two subsidiaries---Standard Chartered Leasing Company and Standard Chartered Mudaraba in September 2015.
Accordingly, two lending companies prin- cipally agreed on amalgamation process on the completion of financial due diligence process in relation to a divestment of its shareholdings in Standard Chartered Modaraba ( SCM) having 20per cent stakes and Standard Chartered Services of Pakistan (SCSP) with 100percent stakes.
The management of Standard Chartered Bank has decided to concentrate on its core banking operation while relieving out its business of financial services through amalgamation of a subsidiary, Standard Chartered Leasing Company with Orix Leasing Pakistan Ltd, and divestment in Standard Chartered Modaraba.
The deal will be sealed once it receives a nod from Security and Exchange Commission of Pakistan (SECP).
Analysts opined the amalgamation of Standard Chartered Leasing with Orix Leasing will bode well for Standard Chartered Bank as it will boost up its capacity of dealing with tough financial challenges including earning.
Standard Chartered Leasing subsidiary is one of the leading leasing companies in Pakistan, catering primarily to SME and retail customers, offering commercial and auto leasing and investment opportunities through cer- tificate of investments.
In nine months of 2015, the company profit squeezed to Rs 14.59 million in Jan to Sept as compared with Rs 21.15 million showing a decline of 31 in profit. During the period, Net Interest Income of the Company dropped by 25% from Rs. 123.98 million in corresponding quarter of the last year to Rs. 92.84 million, in the quarter ended 30 September 2015. The major reason for this decrease, which is impacting the bottom line as well, is decrease in interest rates by 3% during the current period compared to corresponding quarter of the last year.
A reduction in finance cost and administrative expenses, supported by efficient recovery efforts that resulted in reversal of provision for doubtful leases compared to charge during the corresponding quarter of last year, compensated drop in revenue to some extent.
The company maintained overall balance sheet footing with an increase of 1.5% in net assets, during the quarter, through proactive management of assets and liabilities, despite special circumstances and related challenges after announcement of Amalgamation Agreement for merger of the Company with and into another leasing Company.