Bank Makramah Limited (PSX: BML) has secured consent from the required threshold of its Term Finance Certificate (TFC) holders to convert outstanding debt into equity, strengthening the bank’s core capital base.
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Under the approved arrangement, the bank will issue 27.89 million new shares against a total outstanding TFC amount of approximately Rs3.35 billion, subject to applicable tax adjustments. This debt-to-equity swap will see the newly issued shares added to the bank’s Tier 1 capital, directly bolstering its financial cushion.
The decision follows the bank successfully obtaining approval from the necessary majority of TFC holders. However, the share issuance remains subject to two final hurdles: regulatory clearances from relevant authorities and formal approval from shareholders.
This move is a significant step in Bank Makramah’s balance sheet restructuring. By converting debt into equity, the bank reduces its liability burden while simultaneously enhancing its core equity base—a key metric for regulatory compliance and future lending capacity.
The transaction will transform the relationship of participating TFC holders, converting their status from creditors to shareholders. As shareholders, they will gain ownership in the bank and potential upside from future performance, but will also assume equity risk.
For Bank Makramah, the successful completion of this conversion would improve key financial ratios, including its capital adequacy ratio (CAR), potentially creating room for business expansion. The bank operates as a scheduled Islamic bank in Pakistan with a focus on Shariah-compliant financing solutions.
