The local issue of shares in the Hub Power Company (Hubco) closed on 27 October, signifying the completion of financing arrangements for its $1,600 million power project. The finance includes equity of $372 million, subordinated debt of $436 million and senior debt of $738 million. Standby funds of $221 million have also been put in place. ‘We believe this is the forerunner to the way such projects will be financed in the future,’ says treasury director Philip Smith for the project sponsor, the UK’s National Power.

The equity offer worth $175 million was fully underwritten by Deutsche Bank. Seventeen per cent of this was reserved for local investors, and trading began on 30 October on the Karachi Stock Exchange at Rs 14.50 ($0.47) a share, with an initial price set at Rs 13.60 ($0.44). The remainder is in the form of global depository receipts (GDRs), which have on average been quoted at $11.25 since trading began on 5 October. No dividends are expected to be issued until after project completion, scheduled for early 1997.

The loan syndication for $686 million, including $60 million in standby funds, has five levels of participating banks. The co-arrangers are Deutsche Bank, ING Bank, Banco di Napoli, ABN Amro Bank, Crediop, Dai-Ichi Kangyo Bank, Dresdner Bank, Fuji Bank, Industrial Bank of Japan, Mitsubishi Bank, Mitsui Trust & Banking Company, Orix Leasing, Royal Bank of Scotland, Sanwa Bank, Standard Chartered Bank, Sumitomo Bank, Tokai Bank and Westdeutsche Landesbank.

Mitsubishi Trust & Banking Corporation is the senior lead manager. The lead managers are Banco Nazionale del Lavoro, Bank of Scotland, Bayerische Landesbank Girozentrale, Norinchukin Bank and Rabobank. The managers are Daiwa Bank, Banque Francaise du Commerce Exterieur, Centrobanca and Credit Foncier. The co-managers are ANZ Grindlays, Girocredit, Kredietbank, Mediocredito Toscano, MeesPierson, SB Lease and Yasuda Trust & Banking Company (MEED 26:8:94).

The 12-year facility was guaranteed by the World Bank’s expanded co-financing operation (ECO) facility, The Export-Import Bank of Japan (Jeximbank), France’s Coface, Japan’s Ministry for International Trade & Industry (MITI) and Italy’s SACE.

The private sector energy development fund (PSEDF) is providing the $572 million of subordinated debt, including $136 million in standby funds. PSEFD has received money from the World Bank, Jeximbank and the governments of Italy, the US and France for this purpose (MEED 21:10:94).