Chakwal Spinning Mills Limited (CSWSM) announced the cancellation of its planned merger/acquisition with Khazana Enterprises (Private) Limited (KEPL) and the termination of its mandate with financial advisors Optimus Capital Management, following several setbacks in its efforts to enter the technology sector.
The company informed the Pakistan Stock Exchange (PSX) about this move through a notice on Thursday.Â
Initially, Chakwal Spinning and Khazana Enterprises had signed a Memorandum of Understanding (MOU) on January 2, 2024, with plans for a merger or acquisition. However, due diligence could not be completed by KEPL, and despite extending the MOU twice until May 31, 2024, both companies failed to reach a formal agreement, leading to the deal’s collapse.
Following the failed merger, Chakwal Spinning shifted its focus to establishing a new line of business in technology and cloud computing.Â
On August 15, 2024, the company engaged Optimus Capital as a financial advisor to arrange funds, securing a commitment of Rs 7.284 billion from PNO Capital Limited.Â
However, the Securities and Exchange Commission of Pakistan (SECP) raised concerns regarding the deal, prompting Optimus Capital to withdraw from the arrangement. The termination of the mandate was confirmed by the CEO of Optimus Capital in a communication with the SECP on October 10, 2024.
Adding to the company’s challenges, the SECP’s Business Centre refused approval for Chakwal Spinning’s proposed business name “Quantum Cloud & AI,” citing concerns related to cloud operations in Pakistan. The rejection has halted further progress on the company’s planned entry into the technology sector.
Despite these hurdles, Chakwal Spinning said that it remains committed to transitioning into IT-related business activities. The company plans to seek shareholder approval for its next steps at an upcoming board meeting.Â
