Fauji Fertiliser Co is planning to seek approval from its shareholders to increase its authorised capital by 67 percent and to post financial accounts on the website of the company.
Fauji Fertiliser has issued a notice to shareholders of an extraordinary shareholders'' meeting to be held on August 31, 2004.
The meeting''s agenda, among other things, includes a crucial shareholders'' approval for 15 percent bonus shares announced along with 1H2004 results on July 30.
Other issues included on the agenda are approval for increase in authorised capital from Rs 3 billion to Rs 5 billion, and posting of FFC''s quarterly accounts through its website.
When FFC had announced its first-ever bonus issue of 15 percent on July 30, it had also mentioned specifically that the said bonus shares would not be eligible to receive any additional dividend the company may declare for the year 2004, said Khalid Iqbal Siddiqui, research analyst from Investcapital Securities.
"When we had initially spoken to the company''s management, they had stated that since the bonus issue needs to be approved by shareholders in its AGM, the shares can not be eligible to receive dividend till approval," he said.
However, the company has sought to end the confusion by holding an EOGM on August 31 to seek approval from shareholders for the 15 percent bonus issue. "Our latest conversation with the company''s management also confirms that once these bonus shares are approved in the EOGM, these new bonus shares would be eligible to receive any future dividend (including any additional dividend for 2004)."
Since FFC has already paid out two huge interim dividends totalling Rs 8 per share for 2004 to-date and a 15 percent bonus, the company may either skip its final dividend, or pay a very nominal--Re 1 per share--final dividend.
The company is also seeking approval from shareholders for enhancement in authorised capital from the current level of Rs 3 billion to Rs 5 billion. The decision to enhance the authorised capital was taken in April 2004, when 1Q2004 results were announced.
There is still speculation and the market has pretty much taken it as that the bonus issue and increase in authorised capital are both steps towards a merger with FFC-Bin Qasim.
However, the company has made no reference about merger in its communication with shareholders to-date.
Khalid said that FFC has been one of the best defensive stocks listed on local bourses, owing to its strong dividend paying ability. The stock reacted strongly when bonus shares were announced.
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