KARACHI: The Sindh High Court (SHC) has recalled its injunction order of April 27 with respect to the acquisition of Summit Bank Ltd by a consortium, a regulatory filing showed on Monday.
The SHC allowed the injection of fresh equity by Nasser Abdulla Hussain Lootah, a UAE-based investor leading the consortium, to acquire the majority stake in Summit Bank, which is the second smallest among the 20 listed lenders in terms of the total value of shares.
“The injunctive order dated April 27 is hereby recalled with the directions that fresh equity, which is being injected by [Mr Lootah]… be injected forthwith while keeping in mind that fit and proper test is undertaken,” it said, adding that the exercise should be accomplished forthwith since the bank is “undercapitalised and facing great hardship”.
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The suit was filed by two people, including stockbroker Aqeel Karim Dhedhi. The bank had maintained from the beginning that the persons filing the suit had “no locus standi, premised on false and baseless allegations and is replete with concealment and misleading facts”.
The consortium is now set to acquire at least 51 per cent shareholding in Summit Bank along with management control by both subscribing to new shares as well as purchasing existing shares through a public offer at Rs2.51 apiece.
Following the lifting of the injunction, the transaction is expected to be over by the middle of August, a source privy to the development told Dawn on Monday.
Salman Iqbal, owner of the ARY Group, has shown his willingness to be a part of the consortium and subscribe to a maximum of 25pc shares of Summit Bank at the same price of Rs2.51 per share.
The injection of fresh liquidity is meant to partially fix the bank’s capital adequacy issues. Without naming Summit Bank, the International Monetary Fund recently urged the State Bank of Pakistan to take a “more proactive approach” in addressing the matter of its undercapitalisation.
Mr Lootah, who already owns 0.51 per cent shares in the bank, signed a share subscription agreement last year under which Summit Bank will issue a total of 5.97 billion shares to both the acquirer and other minority shareholders. The minority shareholders will have the opportunity to subscribe to 896.4 million or 15pc of the newly issued shares while Mr Lootah will subscribe to the rest.
The subscription exercise at Rs2.51 a share will help the bank generate Rs15bn, which will be used for meeting its “operational requirements”.
In addition to the subscription of new shares, Mr Lootah will make a tender offer of Rs3.29bn to acquire at least 1.31bn shares from existing shareholders at Rs2.51 apiece.
Summit Bank incurred a net loss of Rs1.17bn in the January-March quarter, translating into accumulated losses of Rs39.9bn on its balance sheet. The bank’s capital adequacy ratio stood at negative 61.45pc last year against the minimum regulatory requirement of 11.5pc.
The lender is likely to convert itself into a full-fledged Islamic bank. It expects to generate liquidity by selling its pricey real estate assets, the source added.
The bank’s share price increased 0.87pc to Rs2.32 apiece on Monday.
