Offer for Sale of 50000000 Shares of Engro Polymer & Chemicals Limited
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INVESTORS ARE ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THE OFFER FOR SALE DOCUMENT, ESPECIALLY THE RISK FACTORS AS HIGHLIGHTED IN PARA 4.5, BEFORE MAKING ANY INVESTMENT DECISION SUBMISSION OF FICTITIOUS AND MULTIPLE (MORE THAN ONE) APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS’ MONEY SHALL BE LIABLE TO CONFISCATION UNDER SECTION 18A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969. OFFER FOR SALE OF 50,000,000 SHARES OF ENGRO POLYMER & CHEMICALS LIMITED (Formerly Engro Asahi Polymer & Chemicals Limited) At an Offer Price of PKR 18/- per share (Including Premium of PKR 8/- per share) THIS IS NOT A PROSPECTUS BY ENGRO POLYMER & CHEMICALS LIMITED BUT AN OFFER FOR SALE BY JS GLOBAL CAPITAL LIMITED OUT OF ITS SHAREHOLDING IN THE COMPANY TH THE SUBSCRIPTION LIST WILL INSHA’ALLAH OPEN AT THE COMMENCEMENT OF BANKING HOURS ON 9 JUNE 2008 AND TH WILL CLOSE ON 11 JUNE 2008 AT THE CLOSE OF BANKING HOURS UNDERWRITTEN BY National Bank Limited United Bank Limited Allied Bank Limited Faysal Bank Limited KASB Bank Limited IGI Investment Bank Limited First Dawood Investment Bank Ltd UBL Fund Managers Dawood Capital Management Limited Dawood Equities Limited B.R.R Investments (Pvt) Limited Novatex Limited Date of Publication of this Offer for Sale Document is 31st May 2008 2 Offer for Sale of Shares GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONS The following definitions apply throughout this document, unless the context otherwise requires: “Back Integration Project” Acquisition of capability to manufacture Vinyl Chloride Monomer, Ethylene Di Chloride, Chlorine and Caustic Soda “CDC” The Central Depository Company of Pakistan Limited “CA” Chlor alkali “Combined Cycle Captive Power 60 Mw combined cycle power plant Generation” “Directors” The directors of Engro Polymer & Chemicals Limited, the issuing Company, as described in this document “EDC” Ethyl Di Chloride “EPA” Environment Protection Agency “EPCL” or the “Company” Engro Polymer & Chemicals Limited “ESOT” Employee Stock Ownership Trust “FMCG” Fast Moving Consumer Goods “ISE” Islamabad Stock Exchange “JSGC” JS Global Capital Limited “KSE” Karachi Stock Exchange (Guarantee) Limited “LSE” Lahore Stock Exchange “NEQS” National Environmental Quality Standards ‘Offering Price” PKR 18 per Share (Inclusive of PKR 8 per share premium) “Offeror” JS Global Capital Limited “Offer for Sale Document” or This Offering Document “OFSD” “Companies Ordinance” Companies Ordinance, 1984 (as amended) “Offer for Sale” The Public Offer of 50 million Ordinary Shares to the general public “PVC” Poly Vinyl Chloride “PP & OFS” Private Placement of 24,725,909 Ordinary Shares of PKR 10/- per share at a price of PKR 18/- (including premium of PKR 8/- per share). Offer For Sale of 50,000,000 Ordinary Shares of Engro Polymer & Chemicals Limited (Formerly Engro Asahi Polymer & Chemicals Limited) at an Offer Price of PKR 18/- per share (Including premium of PKR 8/- per share) 3 Offer for Sale of Shares “PKR” or “Rs” The currency of the Islamic Republic of Pakistan “SECP” Securities and Exchange Commission of Pakistan “Shares” Ordinary Shares of face value of PKR 10 each in the capital of Engro Polymer & Chemicals Limited “SMART” Specific, Measurable, Attainable, Realistic and Time bound “Tpa” Tons per annum “VCM” Vinyl Chloride Monomer 4 Offer for Sale of Shares TABLE OF CONTENTS Page No 1.0 APPROVAL AND LISTING ON STOCK EXCHANGE.................................................................................5 2.0 SHARE CAPITAL AND RELATED MATTERS............................................................................................7 3.0 COMMISSION, BROKERAGE AND OTHER EXPENSES ........................................................................17 4.0 HISTORY AND PROSPECTS ....................................................................................................................19 5.0 FINANCIAL INFORMATION.......................................................................................................................32 6.0 MANAGEMENT AND RELATED MATTERS.............................................................................................41 7.0 MISCELLANEOUS INFORMATION...........................................................................................................47 8.0 APPLICATION AND TRANSFER INSTRUCTIONS ..................................................................................51 9.0 SIGNATORIES TO THE OFFER FOR SALE DOCUMENT.......................................................................55 10.0 MEMORANDUM OF ASSOCIATION .........................................................................................................56 11.0 APPLICATION FORM ………………………………………………………………………………………………………….62 5 Offer for Sale of Shares PART 1 1.0 APPROVAL AND LISTING ON STOCK EXCHANGE 1.1 Approval of the Securities & Exchange Commission of Pakistan Approval of the Securities & Exchange Commission of Pakistan (“SECP” or the "Commission") as required under Section 62, read with Section 57, of the Companies Ordinance, 1984 (the "Companies Ordinance") has been obtained for the issuance, circulation and publication of this Offer for Sale Document (“OFSD”). It must be distinctly understood that in giving this approval, the Commission does not take any responsibility for the financial soundness of any scheme or for the correctness of any of the statements made or opinions expressed with regard to them. The SECP has not evaluated the quality of the offer, including the justification of the premium, and its approval of the Offer for Sale Document should not be construed as any commitment in respect of the same. The public/ investor should conduct their own independent investigation and analysis regarding the quality of the offer before subscribing. 1.2 Clearance of the Offer for Sale Document by Stock Exchange The OFSD has been cleared by the Karachi Stock Exchange (Guarantee) Limited ("KSE") in accordance with the requirements under its Listing Regulations. While clearing the OFSD, KSE neither guarantees the correctness of the contents of the OFSD nor the viability of EPCL. The KSE has not evaluated the quality of the offer, including the justification of the premium, and its clearance of the OFSD should not be construed as any commitment in respect of the same. The public/ investor should conduct their own independent investigation and analysis regarding the quality of the offer before subscribing. 1.3 Filing of Offer for Sale Document and other documents with the Registrar of Companies On behalf of the Offeror, the Company has filed with the Registrar of Companies, Companies Registration Office (“CRO”), Karachi, as required under Sections 57(3) and (4) of the Companies Ordinance, a copy of this OFSD signed on behalf of the Offerors, together with the following documents attached thereto: (a) A Letter dated April 23, 2008 from the Auditors of the Company, M/s. A. F. Ferguson & Co., Chartered Accountants consenting to the publication of their name in the OFSD, as required under Section 55 of the Companies Ordinance, which contains in Part 5 hereof certain statements and reports issued by them as experts (which consent has not been withdrawn) as required under Section 57(5) of the Companies Ordinance. (b) Copies of material contracts and agreements mentioned in Part 7 of this OFSD under Section 57(4) of the Companies Ordinance. (c) Written confirmations of the Auditor to the Company, Legal Advisor of the Company and Bankers to the Offer mentioned in this OFSD consenting to act in their respective capacities, as required under Section 57(5) of the Companies Ordinance. 6 Offer for Sale of Shares (d) Consent of Directors and Chief Executive of the Company who have consented to their respective appointments being made and having been named or described as such Directors and Chief Executive in this OFSD, as required under section 57(3) of the Companies Ordinance read with sub-clause (1) of clause (4) of Section 1, of Part 1 to the Second Schedule of the Companies Ordinance. 1.4 Listing on the Stock Exchange Application has been submitted to KSE for permission to deal in and quotation of the shares of the Company. The Company shall stand listed provisionally for trading and for the quotation of its shares on KSE from the day of publication of OFSD or any other date as may be specified by KSE under the “Regulations for Futures Trading in Provisionally Listed Companies”. If for any reason, the application for formal listing is not accepted by the KSE, the Offeror undertakes that a notice to that effect will be immediately published in the press, and thereafter to refund application money to the applicants in pursuance of this OFSD, as required under the provisions of Section 72 of the Companies Ordinance. 7 Offer for Sale of Shares PART 2 2.0 SHARE CAPITAL AND RELATED MATTERS 2.1 Share Capital Number of Face Value (Rs.) Premium (Rs.) Total (Rs.) shares AUTHORIZED 700,000,000 Ordinary shares of Rs. 10/- each 7,000,000,000 - 7,000,000,000 ISSUED, SUBSCRIBED AND PAID-UP 520,367,677 Ordinary shares of Rs. 10/- each 5,203,676,770 1,071,341,416 6,275,018,186 The existing issued, subscribed & paid up capital of the Company is held as follows: SHAREHOLDERS Local Shareholders Sponsoring Shareholder 292,400,000 Engro Chemical Pakistan Limited 2,924,000,000 - 2,924,000,000 Other Shareholders 18,000,000 EPCL Employees Trust 180,000,000 - 180,000,000 273,378 First Dawood Investment Bank Limited 2,733,780 2,187,024 4,920,804 248,525 Dawood Capital Management Limited 2,485,250 1,988,200