Bhanero Textile Mills : Notice of Extraordinary General Meeting - Scheme of Arrangement

BHANERO TEXTILE MILLS LIMITED

NOTICE OF THE EXTRA ORDINARY GENERAL MEETING

Notice is hereby given that an Extra Ordinary General Meeting ("EOGM") of the members of Bhanero Textile Mills Limited (the "Company") is to be held on Thursday 14th July 2022 at 03:00 pm, at the registered office of the Company i.e. Umer House, 23/I, Sector 23, S. M. Farooq Road, Korangi Industrial Area, Karachi, to transact the following business:

1. Ordinary Business
   To confirm the minutes of the 42nd Annual General Meeting of the Company held on 27th October, 2021.
2. Special Business
   To consider and approve the Scheme of Arrangement (the "Scheme") proposed by the board of directors of the Company to be entered into between the Company and Bhanero Energy Limited ("BEL") subject to the sanction of the High Court of Sindh at Karachi pursuant to sections 279 to 283 and 285 of the Companies Act, 2017, details of which have been provided in the statement prepared pursuant to section 281 of the Companies Act, 2017 (the "Act") read with the Statement of material facts under section 134(3) of the Act and annexed to the notice of EOGM.

To transact any other business with the permission of the chairman.

Karachi:	(By the order of the Board)
Dated: 10th June, 2022
	Mohammad Ahmed
	Company Secretary
Notes:

1. For attending the meeting electronically
   In pursuance of SMD/SE/2(20)2021/117 to ensure the participation of members in the general meeting electronically, the members can attend the meeting through video link facility, "Zoom" which is available on Google Play or Apple App Store. The entitled member(s) can access with following ID and password:
   Join Zoom Meeting https://zoom.us/j/3397286733?pwd=N2FFNXpkYkZCS213bzNVNzZZbm94UT09 Meeting ID: 339 728 6733
   Passcode: btmcorp
2. The Shares Transfer Books of the Company will remain closed from 8th July, 2022 till 14th July, 2022 (both days inclusive). Transfers received in order at the Company address i.e. Umer House, 23/1, Sector 23, S. M. Farooq Road, Korangi Industrial Area, Karachi by 7th July, 2022 will be treated in time for the purpose of attendance and vote in the meeting.

1. A member entitled to attend and vote at the EOGM is entitled to appoint a proxy to attend and vote instead of him/ her whereas only the member can act as proxy.
2. The statement under section 281 of the Companies Act, 2017 read with section 134(3) of the Act (the "Statement") setting forth, inter alia, briefly the terms of Scheme and explaining its effect, along with a copy of the Scheme, the audited financial statements for the period ended December 31, 2021, and the report adopted by the board of directors of the Company and BEL is annexed with the notice of EOGM.
3. Copies of the Scheme together with audited financial statements for the period ended December 31, 2021, the letter of Mushtaq & Company, Chartered Accountants dated April 7, 2022, the report adopted by the board of the Company and BEL and the Statement are being provided with the notice for the EOGM being sent to the members of the Company and the same can also be obtained, free of charge from the registered office of the Company during working days on any day prior to the meeting.
4. Notice of EOGM together with the Statement and copy of the Scheme is placed at Company's website i.e. www.umergroup.com
5. A proxy form is attached with the notice of EOGM.
6. Mr. Muhammad Shaheen has been appointed as Chairman of the meeting and will report the results of the meeting to the Court.
7. The Scheme once approved, agreed and adopted by the members of Company and BEL, the Scheme will remain subject to the sanction of the High Court of Sindh.
8. The Scheme has been duly approved and adopted by the respective boards of the Company and BEL under section 282(2)(a) of the Act.
9. The Scheme has been duly filed with registrar by both companies under section 282(2)(b) of the Act.
10. A report as required under 282(2)(c) of the Act has been duly approved and adopted by the respective boards of both the Company and BEL.
11. Since there were no difficulties encountered in respect of valuation of both companies, the need of expert report for valuation is not required 282(2)(d) of the Act.
12. The audited financial statements for the period ended December 31, 2021 are disseminated as annexure with the Scheme.
13. E-Voting,members can exercise their right to demand a poll subject to meeting requirements of Section 143 -145 of the Act and applicable clauses of Companies (Postal Ballot) Regulations 2018.
14. Pursuant to section 132(2) of the Act the Company shall facilitate its members to attend the extraordinary general meeting (EOGM) through video-link by providing video-conference facility, if available, in the city where 10% or more shareholders of the Company reside, provided that the Company receives their demand to participate in EOGM through video-link at least seven (07) days prior to the date of meeting.
    The Company will intimate the members regarding the venue of video conference facility at least five (5) days before the date of EOGM. In this regard it is requested to fill the following form and submit at the registered address of the Company at least seven (07) days before holding of the EOGM:

"I/We, ________ being a member of ________, holder of ________ Ordinary Shares vide folio

______ hereby opt for video conference facility at _____________."

___________________

Signature of Member

17. Under the provision of Section 72 of the Act, the shareholders are now required to replace their physical shares with book-entry form at earliest. Accordingly, the physical shares are now required to be converted into Book-Entry Form and kept by shareholders in their Central Depository System (CDS) Accounts. The CDS Account can be opened and maintained by any CDC Participant Stock Broker or CDC Investor Account Services Department (CDC IAS) of Central Depository Company of Pakistan Limited situated at Karachi, Lahore and Islamabad.

STATEMENT UNDER SECTION 281 (1) (A) READ WITH SECTION 134(3) OF THE

COMPANIES ACT, 2017

This statement set out the material facts concerning the special business to be transacted at the EOGM of Bhanero Textile Mills Limited ("Company") and the terms of the Scheme of Arrangement proposed to be entered into between the Company and Bhanero Energy Limited ("BEL") (the "Scheme") and explains its effect including the interest of the directors/ chief executive of the Company.

1) The Scheme

The principal object of the Scheme is as follows:

1. BEL-KotriUnit 1 Undertaking (as defined in the Scheme) to stand demerged from the BEL.
2. The BEL-Kotri Unit 1 Undertaking to stand transferred to and vest in the Company, against the allotment and issuance of 40,964 shares in the Company by the Company to the shareholders of BEL as described in the Scheme in proportion to their respective shareholding in BEL; and
3. The cancellation of 5.99% of the shareholding of each shareholder of BEL (as described in the Scheme) and consequently reduction in the issued and paid-up share capital of BEL.

The board of directors of the Company and BEL have approved the Scheme and resolved to take necessary steps for the approval and sanction of the Scheme.

A petition, J.C.M No. 10 of 2022, seeking, inter alia, the sanction of the Scheme by the Hon'ble High Court of Sindh has been filed by the Company and BEL under sections 279 to 283 and 285 of the Companies Act, 2017.

2) Approval of the Scheme

Under section 279(2) of the Companies Act, 2017, a majority in number representing three- fourths of the members of the Company and BEL in their respective meetings should agree to the Scheme in order for the same to be sanctioned by the Hon'ble High Court of Sindh. Hence, pursuant to the order dated 1st June 2022, passed by the High Court of Sindh at Karachiin Judicial Miscellaneous Application Nos. 1192 to 1196 of 2022, in petition J.C.M No. 10 of 2022, under sections 279 to 283 and 285 of the Companies Act, 2017, an Extra Ordinary General Meeting (EOGM) of the members of the Company will be held on 03:00 pm at 23/1 Umer House, S.M. Farooq Road, Korangi Industrial Area, Sector 23, Karachi.

3) Proposed Draft of the Resolution

RESOLVED THAT the Scheme of Arrangement for the reconstruction of Bhanero Energy Limited and Bhanero Textile Mills Limited, inter alia, by demerging the BEL-Kotri Unit 1 Undertaking inclusive of certain assets, rights, liabilities and obligations pertaining thereto and vesting the BEL- Kotri Unit 1 Undertaking in Bhanero Textile Mills Limited against the allotment and issue of shares by Bhanero Textile Mills Limited to the shareholders of Bhanero Energy Limited at break-up value all as stated in the Scheme of Arrangement dated 22 April 2022 between Bhanero Energy Limited and its members and Bhanero Textile Mills Limited and its members considered by this meeting and for the purposes of identification initialed by the chairman of this meeting, be and is hereby approved, adopted and agreed, subject to such modifications or additions by, or to any conditions which, the Sindh High Court may impose.

FURTHER RESOLVED THAT for the purposes aforesaid, Mr. Mohammad Salim, Director, and Mr. Muhammad Shaheen, Director, and Mr. Asim Mirza, Chief Financial Officer, be and are hereby, singly and jointly, authorized and empowered to do all or any of the following, for and on behalf, and in the name, of the Company to to do all such acts, deeds, matters and things, as may be deemed necessary, proper or expedient for the purpose of giving effect to the aforementioned resolutions on behalf of the Company in relation to the foregoing and to further sub-delegate any

or all of his powers hereunder."

4) Filing of the Scheme

A copy of the Scheme has been filed with the registrar of Company Registration Office Karachi.

5) Benefits of the Scheme

The benefits of the Scheme have been provided in Part 4 (Benefits of the Scheme) of the Scheme.

6) Effects of the Scheme

The effects of the Scheme have been stated in Part 6 (The Arrangement) of the Scheme. In terms of the Scheme, the paid-up capital of the Company will be enhanced from 3,000,000 shares to 3,040,964 shares as the Company will allot and issue 40,964 shares of the Company in the Company to the shareholders of BEL as described in the Scheme in consideration of the transfer of the BEL Unit-1 Undertaking (as defined in the Scheme) to the Company.

Once the Scheme has been approved by the requisite majority of the members of the Company and BEL, the Scheme shall become operative and effective and bind the Company and BEL and their respective shareholders, creditors and all other third parties once the order sanctioning the Scheme is passed by the Hon'ble High Court of Sindh. When the Scheme becomes effective and operative, it shall be treated as having effect from the date of sanction by the High Court of Sindh or such other date as may be expressly stated or approved by the Hon'ble High Court of Sindh.

7) Swap Ratio

Pursuant to the Scheme, the BEL-Kotri Unit 1 Undertaking is being transferred to the Company at book value and in consideration thereof the Company shall allot and issue shares to the

shareholders of BEL on the basis of the break-up value of the existing issued and paid-up shares of the Company which is significantly higher than the market value of the shares (at the time of approval of the Scheme by the respective board of directors of the Company and BEL). The share swap ratio has been calculated, on the basis of the calculations set out by Mushtaq and Company, Chartered Accountants, in their lettered dated 7 April 2021 as 0.27755 share in the Company to be issued for each 1 share in BEL.

8) Financial Statement

In compliance with Section 282(2)(e) of the Companies Act, 2017, audited financial statements of the Company and BEL for the half year ended December 31, 2021 are attached herewith.

9) Business

The Company is engaged in spinning and weaving activities and one of the leading producers of yarn and fabric. The company operates with one spinning unit located in Sindh whereas one spinning unit and weaving unit are located in Punjab. Besides, the work is still in progress for one more spinning unit to be established in Punjab.

BEL is an unlisted public company engaged in power generation activities. BEL currently operates in Sindh and Punjab.

10) Interest of Creditors

The Scheme will not affect the security of the existing secured creditors of the Company. The execution of the Scheme will not constitute a breach or an event of default by the Company under the existing financing documents.

11) Interest of Directors / CEO / Majority Shareholders

All the directors/ Chief Executive and majority shareholders of the Company are interested in the Scheme to the extent of their common directorships and respective shareholdings in the Company (to the extent applicable). The effect of the Scheme on the interest of these directors does not differ from its effect on the like interests of other members of the Company and BEL.

12) Financial Position - Pre & Post Merger