Kohinoor Textile to buy back 10pc of outstanding shares

KARACHI: Kohinoor Textile Mills Limited (KTML) on Monday announced that its board of directors has approved to buy back 30 million issued ordinary shares of the company, in a bid to improve its earnings per share and future dividends.

The 30 million shares constitute 10 percent of KTML’s outstanding shares and 33 percent of its free float shares, and are worth approximately Rs1.5 billion as per the current stock price. KTML is involved in manufacturing of yarn and cloth, processing and stitching the cloth, and trade of textile products.

The company made the announcement through a notice to the Pakistan Stock Exchange (PSX). “The Board of Directors……. has accorded approval of the Company, subject to approval of shareholders by way of Special Resolution, in order to purchase/buy-back of its own shares through Pakistan Stock Exchange Limited up to a maximum of 30,000,000 (Thirty Million) constituting 10.023 percent of the issued ordinary shares,” Muhammad Ashrad, KTML company secretary notified the bourse.

The company will buy back the shares at a face value of Rs10 each at the spot or current share price prevailing during the purchase period in cash and out of distributable profits of the company for cancellation purpose, according to the notice.

“The reduced capital would consolidate equity, which will improve earnings per share, future dividends and break-up value of the company’s share subsequent to the purchase of shares,” KTML said.

The decision would also provide an opportunity of exit to those members who wish to liquidate their investments at a reasonable price, it added. The company justified that the purchase would have positive effect on its financial position.

The shares will be available for purchase from March 13, 2023 to August 29, 2023 or earlier if the buy-back by the company is completed before August 29.“The purchase/buy-back will be made in cash using distributable profits of the company as required under Section 88(8) of the Act,” the notice informed.

On Monday, the share price of KTML opened at Rs46.5, reached a high of Rs49.45 and closed at Rs48.77, with an increase of 6.02 percent. The volume traded was 1,909,500 shares. Last month, Kohat Cement Company Ltd (KCCL) also announced to buy back up to five million of its shares at the prevailing price for the purchase of cancellation.KCCL will start buying back its shares on March 1 and keep repurchasing the stocks until August 19 or the date when the targeted volume is achieved.