DEWAN SALMAN FIBRE LIMITED (B)

Abstract

Dewan Salman Fibre Limited (DSFL) had issued Pakistan's first Euro-convertible bond worth US $45 million, in May 1994. The bonds were selling at a 40% discount in October 1996. An investment bank proposed that DSFL buy back its outstanding bonds from the market. The purchase price would be provided by the bank, in the form of a five rupee loan. Even though the bank was convinced that this would result in an increase in the company's net worth, the company had shown little interest in the bank's offer. Asma was assigned to present a comprehensive analysis, which would convince the company to accept the bank's proposal.