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PPL to invest 33.33% paid-up capital in Pakistan Minerals

PPL strikes black gold with 55.75% YoY surge in 1HFY23 profits
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November 30, 2022 (MLN): Pakistan Petroleum Limited (PPL) board of directors has approved an investment of up to 33.33% or 1/3rd of the total paid-up and issued capital in an associated company Pakistan Minerals (Private) Limited, the company’s stock filings on the stock exchange showed.

Further company added that any other company which is mutually agreed and incorporated in or outside Pakistan that entity shall act as a holding company through which each of (i) the Company; (ii) Oil and Gas Development Company Limited, and (iii) Government Holdings (Private) Limited, shall participate in the Reconstituted Reko Diq Project.

According to the report, the company approved the investment of $187.5 million plus proportionate accrued interest in Tethyan Copper Company Pty Limited (TCCA).

The amount represents 1/3rd of the total sale consideration agreed to be paid by the SOE SPV against the acquisition of 25% shareholding in the Project Company from TCCA.

Following the terms, if the company wants to utilize the funds amounting to $187.5mn plus accrued interest, deposited/to be deposited by the company in the Escrow Account, toward the Company’s 1/3rd share in the payment of the total sale consideration required to be made to TCCA against its transfer of 25% shareholding to SOE SPV.

Moreover, such payment shall be recorded as investment by way of equity by the company in the paid-up capital of SOE SPV i.e., Pakistan Minerals (Private) Limited (or such other name that may be mutually agreed amongst the SOEs).

If SOE SPV is to restructure its ownership of 25% shareholding in the project company such that the beneficial interest of SOE SPV’s 25% shares in the project company is held through two holding Holdo 1 and Holdco 2  incorporated in Jersey.

According to an agreement if the shareholder contribution by the company is in the form of a shareholder loan, then such loan shall be denominated in USD or based on an amount equivalent in USD and, unless otherwise agreed pursuant to the Definitive Agreements, bear interest at a rate per calendar year, compounded annually equal to the greater of (i) the highest interest rate applicable to any third-party project financing senior debt outstanding at such time plus 200 basis points, and (ii) 6%.

Also, company members approved the issuance of corporate guarantees in the form of the shareholder guarantee agreement appended to the definitive agreements, on a several basis, in favor of the beneficiaries specified therein which as of the date hereof shall comprise of (i) Barrick Shareholder; (ii) GOB SPV; (iii) the holding companies and the project company; and (iv) GOB in respect of the company’s proportionate obligation to fund the SOE SPV and other such matters as are specified in the form of the shareholder guarantee agreement appended to the definitive agreements.

For the need arise, extend, jointly or severally, financing to other SOEs (including their permitted successors, transferees, and assigns) which may be unable to fund their portion of the funding obligations with respect to the SOE SPV as set out in the Definitive Agreements, on an arms-length basis and on market competitive terms that shall, in all cases at minimum be as follows,

  1. Internal financing may only be extended for a maximum term of 1 year, however, such term may be rolled over at the discretion of the SOEs extending the internal financing.
  2. Internal financing will be subject to a minimum annual markup of 1% in addition to 3 months of Kibor.
  3. Internal financing shall be secured by shares owned by the SOE utilizing the Internal Financing in the SOE SPV.
  4. Internal financing shall be extended with market standard debt covenants, including but not limited to, a covenant to the effect that the SOE utilizing the internal financing shall use all funds received exclusively for funding its portion of the funding obligations with respect to the SOE SPV as provided in the definitive agreements.
  5. To the extent the SOE utilizing internal financing is in default of its obligations under the internal financing, it shall not be permitted to declare any dividends till such time as it has cured the default under the internal financing.

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Posted on: 2022-11-30T15:11:30+05:00