Johnson & Phillips (Pakistan) Limited (PSX: JOPP) has officially lodged an application with the Pakistan Stock Exchange (PSX) to delist the company from the main board. Additionally, the company has put forth a proposal to acquire shares from its minority shareholders, as per a disclosure made to the PSX on Wednesday.
The decision to pursue delisting comes in the wake of the board of directors’ resolution passed in July, advocating for the removal of the company from the main board. To facilitate this process, Adam Securities Limited has been appointed as the Purchase Agent, as revealed in the filing.
The company, with an authorized share capital of Rs. 80,000,000 divided into 8,000,000 ordinary shares of Rs. 10 each, currently possesses a paid-up capital of Rs. 54,499,720, divided into 5,449,972 ordinary shares of Rs. 10 each.
The majority shareholder of JOPP, Muhammad Anis Mianoor, has proposed the purchase of 545,983 ordinary shares held by minority shareholders at a proposed price of Rs. 35 per share. This transaction, however, is subject to the green light from the PSX and compliance with relevant regulations.
Enumerating the rationale behind the decision to delist, the company cited several factors:
- Mounting Compliance and Administrative Costs: The burgeoning compliance requirements and associated administrative costs of maintaining listing status have become excessively burdensome.
- Challenging Economic Environment: The current economic conditions in the country have rendered it arduous for the company’s sponsors to effectively manage its affairs as a listed entity.
- Transition from Manufacturing to Trading: Johnson & Phillips (Pakistan) Limited has shifted from being a manufacturing concern to primarily engaging in trading activities. However, the fluctuating currency dynamics have made trading increasingly intricate.
- Market Cap Disparity: The company’s relatively modest market capitalization, in comparison to other listed entities, has made the continued listing status less tenable.
- Limited Share Trading Activity: Given that the majority of shares are held by the Sponsor and their family members, the trading volume in the company’s shares remains nominal.
In light of these considerations, Johnson & Phillips Pakistan has determined that the most beneficial path for all stakeholders is to voluntarily delist from the PSX while simultaneously offering to repurchase shares from its minority shareholders. The company has requested the PSX to expedite the processing of its application for delisting and share purchase from minority shareholders.