Pakistani property tycoon, Malik Riaz Hussain inked the sales purchases agreement (SPA) to take over Escorts Investment Bank Limited and its brokerage house at the token price of Rs. 1. This non-banking financial institute was in hot waters since 2014 and was unable to fulfill its financial obligations.
The Manager to the Offer (MTO) AKD Securities Limited made the announcement at Pakistan Stock Exchange (PSX) on Monday and disclosed the details of the Sales Purchase Agreement.
According to details in the SPA, Bahria Town agreed to take over more than 85 percent of Escorts Investment Bank shares. Bahria Town will purchase these shares in 2 different lots. It will buy 71 percent of the sponsor shares of Escorts Investment Bank at the price of Rs. 1.
“The sale and purchase of 31,385,126 Ordinary Shares representing 71.168% of the total issued share capital of the Target Company, Escorts Investment Bank Limited, at an aggregate sale price of PKR 1/- calculated at the rate of PKR 0.0000000319/- per share. The Sponsor Sellers’ shares are held in blocked Central Depository Company (CDC) accounts and will be transferred to the Bahria Town after further regulatory clearances from the regulators”, the announcement said.
Public Announcement of Offer to acquire up to 6,357,437 (14.42 percent) ordinary shares of Escorts Investment Bank Limited come at a price of Rs. 10.23 per share. These shares will be sold after voting and take over rights.
Bahria Town has adequate financial resources to fulfill the obligations under the arrangements of the Public Offer. To the satisfaction of the Manager to the Offer (AKD Securities), a cash deposit of PKR 65 million was made in an escrow account operated by the MTO.
The announcement said, “If the Acquirer fails to pay in response to the Public Offer as required under the Act and the Regulations, the Manager to the Offer can demand the amount required to make payment to the shareholders who will tender their shares in response to the Public Offer.”
The management of Escorts Investment Bank was not able to pay NBFC License fee since 2014. The bank also fails to meet the minimum equity requirement of Rs. 600 million. It has not been able to pay the outstanding amount of Rs 450 million to its depositors as well.
Accounts show that the bank also failed to pay Rs. 311 million of tax on assets and investments for its subsidiary. The total exposure of the bank in its wholly-owned subsidiary, Escorts Capital Limited, is more than Rs. 375 million.