Early Redemption of Preference Shares by MPCL
Effective July 01, 2014, the Economic Coordination Committee (ECC) approved dismantling of Mari GPA with the condition that the un-distributable balance as on June 30, 2014 amounting to Rs 9.67 billion will be surrendered to GoP and minority shareholders in the form of preference shares as “quid pro quo” for dismantling of Mari GPA. In addition, Rs 920 million provided for Mari Seismic Unit were also converted into preference share capital favoring GoP. These shares carried a profit rate of one year KIBOR + 3% and were to be redeemed within ten years. Accordingly, preference shares were issued to GoP and minority shareholders on June 19, 2015.
Subsequently, based on approval from SECP, Board of Directors, GoP and shareholders in the EOGM held on June 23, 2016, the Company has redeemed preference shares held by GoP/others along with profit for the applicable period and an amount of Rs 9.718 billion was paid to GoP on June 24, 2016 on account of redemption of preference shares. It is highlighted that the Company has already redeemed the preference shares issued to the minority shareholders of the Company.
Efficient cash flow management, dedicated teamwork and proficient workforce resulted in redemption of preference shares within one year since coming into Crude Oil price linked business model while the International Crude Oil price took a nosedive from $120 to $28 per barrel. Early redemption of Preference shares held by GoP is yet another prudent and a farsighted decision which will be beneficial to all the stakeholders as profit would be ploughed back into Exploration of undiscovered hydro-carbons. Consequently, redemption of preference shares will result in cost savings for the Company, whereas, GoP has benefitted in the shape of lump sum payment of Rs 9.718 billion.