Pak Elektron Limited (PAEL) intends to raise over Rs5 billion through the issuance of right shares, the company informed on Monday.

The company, in its notice to the Pakistan Stock Exchange (PSX), said that it will issue 358,330,670 shares at a price of Rs14 per share, aggregating to Rs5,016,629,380.

"We have to inform you that the Board of Directors, in their meeting held on February 07, 2022, have decided to increase the paid-up share capital of the Company by issue of a further 358,330,670 ordinary shares, having face value of PKR 10/- (Pak Rupees Ten) each, as RightShares, to be offered to the members in proportion of 72 Right Shares for every 100 ordinary shares held i.e. 72%, at a price of PKR 14 per Right Share (inclusive of a premium of PKR 4 per Right Share)," stated the notice.

The company said that the Rs4 per share premium charged over the par value is justified and is in line with the prevailing market practice.

It added that the purpose of this issue is to raise funds to enable it to reduce current debt levels and improve its capital structure, by reducing leverage in an increasing interest rate environment, meeting growing working capital requirements, and achieving economies of scale.

“The proceeds of the right shares will also be utilized for meeting growing working capital requirements and paying for capital expenditure,” it added.