Waves Home Appliances to raise Rs1.5 billion through 56% rights issue

The board of Waves Home Appliances Limited has approved a rights issue of 150.02 million ordinary shares to raise approximately Rs1.5 billion, according to a notice submitted to the Pakistan Stock Exchange on Thursday.

The company will offer 56 right shares for every 100 ordinary shares held, equivalent to 56% of its existing paid-up capital. The shares will be issued at their face value of Rs10 each, without a premium.

The issue will increase the company’s paid-up share capital from Rs2.679 billion to Rs4.179 billion.

Waves Home Appliances plans to allocate up to Rs800.16 million, or 53.3% of the proceeds, to working capital requirements associated with its expansion in the air-conditioner market and continued investment in its deep-freezer and refrigerator businesses.

The remaining Rs700 million, representing 46.7% of the proceeds, will be used to partially repay a loan owed to its holding company, Waves Corporation Limited.

The company said the capital injection would help reduce its reliance on bank borrowing, lower financing costs, improve liquidity and support expansion of its product portfolio.

Waves Home Appliances recently re-entered the air-conditioner market and intends to expand in the segment while continuing to invest in its existing appliance businesses.

The filing identified the possibility of undersubscription as a risk because the Rs10 issue price is above the company’s prevailing market price.

However, substantial shareholders and directors have undertaken to subscribe to, or arrange subscriptions for, their respective entitlements. The remaining shares will be underwritten, while Waves Corporation has committed, subject to approvals, to subscribe to any unsubscribed portion beyond its own entitlement.

The dates for the closure of the company’s share transfer books and determination of shareholder entitlements will be announced after the offer document is finalised.