Two listed companies, Crescent Star Insurance Limited (CSIL) and the management of Dost Steel Limited (DSL), are fighting over the control of Dost Steel Limited. CSIL has lodged serious allegations of financial irregularities against the DSL management and has already moved to the Lahore High Court for the appointment of 60% directors in the company’s board and the acquisition of 78 million shares of DSL.
CSIL is a major investor in DSL, and seeks the transfer of the shares it was supposed to receive under the shareholder agreement.
CSIL provided material information about the matter to Pakistan Stock Exchange (PSX) on Thursday and stated that CSIL has found “a number of discrepancies in the accounts of DSL.” In its notice, CSIL stated that DSL conducted a transaction of Rs 254 million in relation to Dynasty Trading (Private) Limited without attaining prior consent from CSIL.
“CSIL has questioned this transaction by writing to the auditors of DSL and has sought clarification in the regard,” CSIL management informed PSX. “However, till this date, CSIL has not received any clarification from auditors.”
Crescent Star Insurance explained that under the Shareholders Agreement, DSL should have transferred 93.5 million shares at the price of Rs 4.50 per share to CISL. “However, due to gross violation of restructuring agreement agreed between DSL, Summit Bank, and its sponsors, Summit Bank sold the right entitlement without any lawful authority during 2016 right issues which caused a shortage of shares” CSIL alleged. Therefore, CSIL were only allocated 15 million shares instead of 93.5 million shares. CSIL has moved the Lahore High Court for “issuance of the shares and appointment of 60 percent of CSIL’s directors in accordance with the Shareholders Agreement.”
CSIL in its letter to PSX alleged that it has found fabrication in the minutes of the Dost Steel’s Annual General meetings and Board of Directors meetings. “CSIL in this regard has already filed complaints before Pakistan Stock Exchange and Securities Exchange Commission of Pakistan, which are currently under investigation.”
However, Crescent Star Insurance clarified that it is not in possession of any material information and nor is aware of any ongoing restructuring or acquisition deals as rumored.
According to PSX data, Dost Steel Ltd. was the highest traded stock today with trading volume of 58.6 million shares. The share price went as high as Rs. 7.35 but closed the day at Rs 5.94 compared to Rs 6.60.
The Correspondent repeatedly attempted to contact Dost Steel’s management at its corporate office but did not receive any response by the time of filing this story