Lahore High Court Approves Nishat Group Restructuring Scheme

The Lahore High Court has recently approved a significant scheme of arrangement involving Nishat Chunian Power Limited (NCPL) and Nishat (Chunian) Limited (NCL), set to take effect on November 1, 2024. This decision marks a pivotal moment for the Nishat Group, as it aims to restructure its investments and enhance its financial standing.

Under the approved arrangement, Nishat Mills Limited (NML) will transfer its shares in NCL to Shahzad Saleem. In return, Shahzad Saleem will provide a proportionate shareholding in NCPL to NML, based on a mutually agreed swap ratio of 1.93 NCPL shares for each NCL share. This exchange will lead to a notable shift in shareholdings: Shahzad Saleem’s stake in NCPL will decrease to 1.72 million shares, while NML’s ownership in NCPL will rise significantly to 88.63 million shares. On the other hand, Shahzad Saleem’s shareholding in NCL will increase to 87.80 million shares, effectively allowing NML to exit its position in NCL.

As of September 2024, NCPL boasts a robust cash position of PKR 12.45 per share. However, the distribution of dividends was postponed until the court's approval of the scheme. With the High Court's sanction now in place, dividends are expected to commence from December 2024. Optimus Research has projected a potential payout of PKR 4.00 per share for the fiscal year 2025, along with the possibility of a substantial one-time dividend. This restructuring is anticipated to have a significant impact on the portfolios of both NML and Shahzad Saleem, while also enhancing NCPL’s financial attractiveness through likely dividend distributions.

The Board of Directors of Nishat Mills Limited initially approved this scheme in May 2024, with the objective of restructuring its investments in NCL and NCPL. This move aims to potentially alter the terms of equity investments in these entities, thereby streamlining operations and improving financial performance. Furthermore, in September, the Competition Commission of Pakistan (CCP) also granted approval for the internal restructuring involving NCL, NCPL, NML, and NCL’s CEO Shahzad Saleem. This step is part of broader efforts to refine the corporate structure of the Nishat Chunian Group.

The approval of this scheme by the Lahore High Court is a strategic maneuver for the Nishat Group, promising to reshape its financial landscape. As the restructuring unfolds, stakeholders will be keenly observing how these changes will influence the overall market dynamics and the future growth trajectory of the involved entities. The anticipated dividend distributions could also provide a much-needed boost to investor confidence, making this a noteworthy development in Pakistan's corporate sector.