Pak Suzuki announces exit from stock market due to declining profits

Pak Suzuki Stock Market Exit

WEB DESK: In a recent announcement to the Pakistan Stock Exchange (PSX), Pak Suzuki Motor Company (PSMC) revealed that its Board of Directors (BoD) has made a strategic decision.

The BoD of PSMC convened to discuss the voluntary delisting of the company from the PSX, as outlined in Section 5.14, Voluntary Delisting Rules of the PSX Rule Book.

Under this provision, the BoD has resolved to delist PSMC from the PSX and subsequently purchase all outstanding shares of the company, leading to its delisting from the stock exchange.

This resolution grants the majority shareholder, Suzuki Motor Corporation, the authority to buy back ordinary shares held by minority shareholders.

The buy-back will be executed at a price determined in compliance with the regulations set forth by the PSX, or Securities Exchange Commission of Pakistan, facilitating the voluntary delisting process.

This decision stems from several factors, including financial losses incurred by Pak Suzuki in 2019, 2020, and 2022. The company also experienced losses in the third quarter of the current fiscal year.

Additionally, dividends have not been disbursed to shareholders since 2019. Furthermore, the share price of Pak Suzuki has reached a historically low level, and the daily transactions and sales have become limited.

In light of these challenges, Suzuki Motor Corporation, the majority shareholder, aims to acquire complete ownership of Pak Suzuki by purchasing all outstanding shares and securities from minority shareholders.

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This move not only consolidates ownership but also aligns with the intention to delist the company from the PSX. The decision is seen as a fair exit opportunity for minority shareholders in light of the unfavourable market conditions.

Despite this delisting decision, PSMC said that that Pakistan continues to be a pivotal market within Suzuki’s global strategy. The company remains optimistic about Pakistan’s future potential.

Interestingly, this announcement had an immediate impact on the company’s share price, which saw a significant surge, reaching its upper limit during Thursday’s trading.

This development follows a series of challenges faced by PSMC, including declining sales and high finance costs, leading to reported losses of Rs9.68 billion in the first half of FY2022-23.

Throughout the year, the company had previously announced multiple plant shutdowns, affecting both its vehicle and motorcycle manufacturing operations in Pakistan.

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