Kathmandu: Everest Insurance Company and Himalayan General Insurance Company, both have called special general meeting to pass the agenda of merger. Both company’s BoDs have agreed to merge with the swap ratio of 1:0.85 where the per unit price of Himalayan General Insurance will fall to Rs.85.
The new company will be named as Himalayan Everest Insurance. After the swap ratio set by Everest Insurance Company and Himalayan General Insurance Company, the paid-up capital will reach Rs 2.25 billion. As per the swap ratio (1: 0.85), the paid-up capital of Everest Insurance Company will remain unchanged while the paid up capital of Himalayan General Insurance Company will be shrunk to Rs. 997.4 million.
At present, Everest Insurance has a paid-up capital of Rs 1.25 billion. The remaining Rs.176 million from the swap ratio will be transferred to the reserve fund. Such amount cannot be distributed as a cash dividend but as bonus shares.
Currently, the Himalayan General has a reserve fund has Rs. 229.5 million while Everest Insurance has Rs. 339 million. After the merger, the reserve fund from the swap ratio will amount to Rs. 736.5 million. Now, after the merger, the company can easily raise capital by distributing bonus shares to raise the paid-up capital stipulated by the Insurance Board.