Crescent Star Insurance claims 60 per cent stake in Dost Steel

KARACHI: The Crescent Star Insurance Limited (CSIL) has claimed 78 million shares, representing 60 per cent stakes (sponsor holding) in Dost Steel Limited (DSL), with an aim to revive the company lying idle with a name plate steel production capacity of 350,000 tonnes.

CSIL had already approached the Lahore High Court, seeking directives to DSL for the issuance of shares as per the agreement.

CSIL had made an advance of Rs354.279 million for the issuance of shares to DSL. The Crescent Star Insurance Limited has also charged interest, amounting to Rs225 million on the advance amount.

“[The] Crescent Star Insurance Ltd in addition to the interest claimed for Rs225 million, has a stake amounting to Rs354 million in Dost Steels Ltd (DSL), which according to the shareholders agreement, is entitled to 78 million shares of DSL, which once issued is equivalent to the sponsors holding,” CSIL noted in a letter to the Pakistan Stock Exchange.

“According to the shareholders agreement, CSIL should have 60 per cent representation on the board of DSL. CSIL had already filed a petition in the High Court of Lahore for directions for [the] issuance of shares as per the agreement.”

The Crescent Star would also approach the regulator for necessary approval of the strategy for the issuance of shares, against advances, which will possibly revive DSL, as well as present a clearer reflection of the assets, liabilities and affairs of DSL.

“This will brighten the options available for discussion with potential buyers and investors, which will protect the stakeholders and creditors of the company.”

The CSIL Board has decided to take bold initiatives to find a way forward to resolve the long outstanding matter and revive the company having ready for production capacity available.

However, the company’s auditors have expressed their reservation in the auditors’ report over CSIL’s interest claims due to the unavailability of any written agreement between DSL and CSIL for charging of markup.

“The group has recorded accrued interest at a rate of one year KIBOR plus three per cent on the advance against issue of shares to Dost Steels Limited. We have not been provided any documentary evidence to substantiate the claim against accrued interest and under the circumstances the recoverability of the interest income accrued could not be ascertained,” the auditors noted in the company’s last annual report.

Dost Steels posted a net loss of Rs131.89 million (EPS: 0.42) for the quarter ended March 31, 2021. “The company is exploring various options and feasibility to overcome the working capital shortage and achieve capacity enhancement through potential investments, joint venture, strategic alliance/partnership to resume the operations of the company,” Dost Steels CEO Jamal Iftikhar noted in the company’s last financial statement.

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