Chakwal Spinning’s Merger With Tech Firm Fails to Materialize

Chakwal Spinning Mills Limited (PSX: CWSM) merger with technology company Khazana Enterprises (Private) Limited (KEPL) has failed to materialize.   In a notice to the Pakistan Stock Exchange (PSX) on Thursday, CWSM highlighted that a MoU between KEPL and CWSM for possible merger/acquisition signed on January 2, 2024, for 90 days, valid till March 31, 2024m was disclosed to public on January 9, 2024, after its approval from the board of directors.  As the due diligence could not be concluded by the KEPL, MoU was extended through Addendum for 60 days on March 31, 2024, valid till May 31, 2024. Even after the expiry of MoU, a draft agreement with details was continued under discussion but could not be agreed upon, it added.  Therefore, a formal agreement for merger/acquisition could not be materialized, the notice said.  The notice further said that after expiry of MOU with KEPL and subsequent disagreement on formal agreement, the CWSM gave mandate to OPTIMUS as Consultants/Advisors on August 15, 2024, for arranging funds for the company to establish its own new line of business as technology and cloud computing.   OPTIMUS arranged commitment of funds around Rs. 7.284 billion from PNO for which a Term Sheet was signed between CWSM and PNO Capital Limited (PNO) on August 15, 2024. As neither the PNO nor OPTIMUS had official terminated its Terms Sheet even after refusal of name by the SECP, however, the Chief Executive Officer of OPTIMUS vide his emailed dated October 10, 2024, in response to an email query of the Chief Executive of CWSM for getting update on the status of the Commitment of funds by PNO, the CEO OPTIMUS explained that they felt that they would be engaged when all regulatory matters are cleared, therefore, the company has no plan to proceed further with the OPTIMUS/PNO. The notice said the Business Centre of SECP, Islamabad, sent a letter on October 2, 2024, refusing the name “Quantum Cloud & Al Technologies” due to expiry of MOU with KEPL and planned launch of Data Centre and Cloud operations in Pakistan, financed by PNO, is in doubt due to refusal by PNO to proceed further with this transaction.  Despite having all odds, the management of the CWSM is committed that journey started to transform into IT related Business shall be succeeded with speediness and tireless effort for best interest of the shareholders, the notice added.