HUBC secures approval for Rs5.4bn investment in Sindh Engro Coal

September 30, 2024 (MLN): The Hub Power Company Limited (PSX: HUBC) has received its shareholders' approval for additional investments in Sindh Engro Coal Mining Company Limited (SECMC), with a total investment capped at Rs5.4 billion.

Through this, HUBC will acquire 152.99 million shares (up to 9.5% of SECMC's capital) from Habib Bank Limited at a price of Rs35.3 per share.

The approval for the Proposed Investment will remain valid for the Term as defined in the GoS Implementation Agreement dated November 19, 2015, pertaining to SECMC.

Additionally, the members have authorized investments in SECMC, from time to time, not exceeding approximately $2.2 million by way of subscription of shares at the rate of Rs14.82 per share.

For the proposed equity investment, the company is authorized to arrange and provide a standby letter of credit to cover the equity investment of the Assumed Seller Equity Obligation in its capacity as a project sponsor to the satisfaction of the lenders of the SECMC;

HUBC would also provide sponsor support for provision of a standby letter of credit to cover Subsequent PSRA LC for an amount up to, and not exceeding approximately $7.2m, either by way of subscription for shares at the rate of Rs14.82 per share or by treating such amount as subordinated debt,

It will also provide sponsor support to cover cost overruns and funding shortfalls of up to $1.1m as may be requested by SECMC or the lenders.

The company may provide standby letters of credit (SBLC) and guarantees for equity investments, cost overruns, funding shortfalls, and other financial obligations to SECMC.

This support will not exceed approximately $10.5m and may involve subscribing to shares at Rs14.82 each or treating the amount as subordinated debt, in compliance with applicable laws and terms agreed upon with SECMC and its lenders.

The resolution also revises previous approvals regarding standby letters of credit, reducing the amount from $20m to $4m and extending its term until project completion or June 2026.

Moreover, the company is authorized to make amendments to the Original Facility Agreement with banks and financial institutions as necessary.

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