Karachi: As requested in our letter No.FCL/CA/04/003 dated 12th June 2010 that the company will be able to declare dividend for its shareholders for the year ending on June 30, 2011. We regret to state that due to recent terrorism and adverse Law and Order situation prevailing in the Province, particularly in Peshawar wherein Frontier Ceramics Limited (FRCL) is located, business/operations of the company were badly affected though performance Vs previous period remained better. And as communicated to you in the letter under reference no dividend could be recommended by the Board of Directors of the Company during the period.
A major reason ensuing non-payment of dividend, is regular payment of rescheduled /restructured long term loan (liability of the Company) as settled in the meeting of Committee for Revival of Sick Industrial Units (CRSIU), the present management took over the company as a sick unit. In this regard the management reached a settlement agreement dated June 26, 2008 regarding the payment of long term loan with the creditor banks. The loan was rescheduled to Rs. 168 million payable in a period of three years of the date of agreement through regular monthly installments of Rs. 4.38 millions. Accordingly, in case of any default in payment as per the terms and conditions of the agreement the waiver granted i.e. Rs 682 million to the company shall become ineffective and stand revoked and the company will be liable to pay full outstanding amount of loan including principal plus interest/markup etc. to the creditor banks. Unfortunately this was also qualified by the auditors of the Company in the financial statement for the year ended June 30, 2010.
Therefore, the management is under tremendous pressure for the fulfillment of its repayments commitment of agreed settled amount of bank loan by March 2012. Any default in monthly payments will consider violation of agreement and entitle the banks recovery of all loan amounts along with the waiver amount. Therefore, till the repayment of complete loan amount, it is not in the interest of the shareholders to delay the loan payment, the settlement of which is top priority of the management. A copy of the settlement agreement is enclosed for your kind perusal and ready reference.
It is therefore, requested to very kindly with hold the placement of Frontier Ceramics Limited on the non-complaint Segment and exempt the company from the payment of dividend minimum for a period of next two (2) years i.e. for the years ending June 30, 2011 and June 30, 2012 enabling Frontier Ceramics Limited which was rehabilitated being a sick unit to continue its operations for the benefit of the shareholders.
For more information, contact:
Frontier Ceramics Limited