Delay in tender offer by Greentree Holdings for TRG Pakistan irks investors

KARACHI: The delay in the tender offer by Bermuda-based Greentree Holdings for PSX-listed TRG Pakistan has caused frustration among investors, with efforts to block the transaction — by former CEO Zia Chishti and a brokerage house—prolonging uncertainty around the process.

Initially announced on January 15, 2025, at Rs75 per share—representing a 25% premium to its pre-tender price—the offer was stayed on February 26 by the Islamabad High Court in response to a petition filed by a small shareholder and later joined by the JS Group. However, the court dismissed the petition on March 19. The petitioners have since appealed the decision.

Following this, the tender was relaunched, but on the first day of the acceptance period, March 25, the Sindh High Court issued an ex-parté status quo order in response to a petition filed by Chishti. The order takes effect at the end of the acceptance period, effectively pausing the transaction.

Many shareholders have expressed concern that these legal challenges are preventing over 10,000 investors from realizing potential gains on their investment.

As Greentree Holdings is a foreign entity, the delay in completing the tender is also holding up approximately $50 million in foreign exchange inflows into Pakistan—an amount viewed as significant given the country’s ongoing economic challenges.

“These repeated lawsuits seem intended to prevent these funds from being brought into Pakistan,” said one TRG Pakistan shareholder.

“After losing a similar challenge in U.S. arbitration, the former CEO and his associates appear to be exploring every possible legal route to block the public offer,” the shareholder added.

The current situation places investors in a difficult position, as they must choose between the uncertainty of when they might be able to sell their shares at a profit and accepting the tender offer in time to lock in a 25% premium to the pre-tender price.

At a recent hearing, the court allowed Greentree to extend the tender acceptance period until after a decision is reached. This has intensified market interest in the outcome as investors seek clarity.

According to one market analyst, the legal back-and-forth is linked to an ongoing contest for control of TRG Pakistan, with Chishti and the JS Group on one side and the current board and management on the other. If the tender goes through, it could lead to Greentree securing a majority stake in the company.

This power struggle dates back to late 2021, when Chishti resigned following a US Congressional hearing that disclosed the existence of an arbitration award against him for sexual harassment and assault. This hearing contributed to the passing of a new bill called “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” into law.

TRG’s management has contended that any renewed influence by Chishti and his allies could harm the company’s operations and reputation. They believe the attempt to gain control is driven by a desire to access the company’s U.S. dollar-denominated assets and are firmly opposed to withholding those funds from Pakistani shareholders.

Over the past three years, multiple legal disputes have played out between TRG entities and Chishti and the JS Group. TRG has alleged that Chishti used financing from the JS Group to improperly acquire TRG Pakistan shares—a claim that was upheld in a U.S. arbitration. Recent court filings in the Sindh High Court have also revealed a Rs2.5 billion loan from the JS Group to Chishti, which he has reportedly defaulted on.

Efforts by Chishti to challenge his sexual harassment arbitration award have been unsuccessful so far. A defamation suit he filed against the former employee over her Congressional testimony was dismissed by a U.S. court. Separately, libel proceedings by Chishti against the Telegraph as to one of the several articles they published about this subject were recently settled, with the newspaper issuing an apology to Chishti and making payment to him for damages and contribution to his legal cost.

Investors at the PSX are now looking to the court’s ruling, hopeful that the tender process will resume and allow for a successful exit. Industry observers share this sentiment, noting that a resolution could allow TRG to move forward and refocus on its business following a prolonged legal battle since the resignation of its former CEO.

Copyright Business Recorder, 2025