⏸️ LSEFSL: HOLD Signal (5/10) – Material Information – Approval of the Scheme of Compromises, Arrangement and Reconstruction

📌 Key Takeaways

• ⚖️ Lahore High Court has sanctioned the Scheme of Compromises, Arrangement, and Reconstruction between LSEFSL and DCCL as of October 13, 2025.
• 🔄 LSEFSL will distribute its shares of LSE Capital Limited (LSECL) to its shareholders at a ratio of 287.06 shares per 1,000 LSEFSL shares.
• 🏦 DCCL will distribute its shares of LSEFSL to its shareholders at a ratio of 25.17 shares per 1,000 DCCL shares.
• ✂️ The scheme involves a capital reduction for both LSEFSL (24.32%) and DCCL (23.47%).
• 📅 An Entitlement Date will be determined on November 1, 2025, to allot LSECL shares to shareholders.
• 🚧 LSEFSL has declared a “Closed Period” from October 30 to November 01, 2025, during which no dealing in shares is permitted for insiders.
• 💰 Liabilities of Rs. 37.82 million will be transferred from DCCL to LSEFSL as part of the scheme.
• 🧩 The scheme involves reorganizing and repositioning LSEFSL as a regular public listed company after surrendering its NBFC license.
• 🏢 DCCL aims for a listing on the Pakistan Stock Exchange (PSX) as a result of the share distribution.
• 📑 A statement of Financial Position showing the Scheme Effect as on the Sanction Date will be provided within 90 days.
• 🤝 Shareholders of LSEFSL will receive shares in DCCL and LSECL, both of which will become freely tradable on the PSX.
• 📊 The authorized share capital of LSEFSL will decrease from 111.9 million to 42.9 million shares, while DCCL’s will increase from 60 million to 129 million shares.
• 📉 LSEFSL’s issued share capital will decrease from 35,677,578 to 27,000,000 shares after the scheme.
• 📈 DCCL’s issued share capital will decrease from 52,266,777 to 40,000,000 shares after the scheme.
• 🎯 The scheme aims to improve DCCL’s corporate governance and internal control environment.

🎯 Investment Thesis

HOLD. The scheme introduces several moving parts. While the distribution of assets and liabilities should create value, the financial results depend on the growth of independent entities. I recommend HOLD, until the completion of the scheme. Once financial statements for the new entities are available, reassess the recommendation. I recommend a 6-month time horizon with a potential price target dependent on the growth of DCCL after its PSX listing.