HUBCO initiates legal proceedings against encashment notice

November 24, 2022 (MLN): The Hub Power company limited (HUBC) has initiated legal proceedings against the encashment notice by China Power Hub Generation Company (CPHGC) on the advice of its legal counsel in order to safeguard the interests of its shareholders, the company filing on PSX showed today. 

The aforesaid development comes after the CPHGC's serving encashment notice worth $150 million under the Standby Letter of Credit (SBLC), on the issuing bank provided by HUBC. 

HUBC as a joint venture partner and Pakistani sponsor of CPHGC had issued security in the form of an SBLC of $150 million in favor of CPHGC expiring on 23rd Nov’22.

Moreover, HUBC is the first and largest independent power producer in Pakistan and remains committed to providing the country with affordable and uninterrupted energy and taking any and all necessary actions to protect the best interests of its shareholders.

Earlier today, Rao Amir Ali Research Analyst at Arif Habib Limited told MG Link News that HUBC might issue a new SBLC to CPHGC within ten days. In case of non-issuance of new SBLC, banks will disburse $150mn to CPHGC.

“In this case, a liability of the same amount will be booked on the books of HUBC against a receivable from CPHGC. We believe, CPHGC will repay the SBLC amount to HUBC after the Project Completion Date (PCD)”, he added.

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