Subscriptions for the $175 million of equity in the Hub Power Company (Hubco) are expected to close by the end of October, completing the complex financing arrangements for Hubco’s $1,640 million power project. Loan agreements worth more than $770 million have been signed and the remaining $325 million of equity has already been placed.
The international equity offer has been heavily oversubscribed, says arranger Morgan Grenfell. Since trading in the 16 million global depository receipts (GDRs) began on 5 October, the maximum price quoted for a GDR has been $13.25, compared with an initial placing price of $10.825. A total of 404 million shares are on offer, with each GDR representing 25 shares. Of these, 69 million shares worth about $30 million were offered to local investors. The domestic offer is due to close on 17 October.
On 30 September Hubco signed a $686 million loan agreement in London. The 12-year credit and standby facility was arranged by Citibank International, Bank of Tokyo International, Credit Lyonnais, National Westminster Bank and The Sakura Bank. More than 35 banks had applied to join the syndication when it closed on 5 August.
A Rs 3,012 million ($98.4 million) local currency loan agreement was signed in Karachi on 2 October. The government’s National Development Finance Corporation arranged the cost-plus facility. The participants are Habib Bank, National Bank of Pakistan, Allied Bank of Pakistan, United Bank, Muslim Commercial Bank, Pakistan Industrial Credit & Investment Corporation, Industrial Development Bank of Pakistan and Saudi-Pak Industrial & Agricultural Investment Company.
The promoting shareholders have taken part of the $325 million equity. They are:
The UK’s National Power International – 20.4 per cent
Saudi Arabia’s Xenel Industries – 14.5 per cent
Japan’s Mitsui & Company – 2.4 per cent
Japan’s Ishikawajima-Harima Heavy Industries – 2.4 per cent
The US’ K&M Engineering – 0.2 per cent.
The other shareholders are Pakistan Power (10 per cent), the US’ Entergy (10 per cent), Xenergy, an investment vehicle for employees and associates of Xenel, (2.4 per cent), the UK’s Commonwealth Development Corporation (CDC – 1.6 per cent), the government of Baluchistan (0.1 per cent) and other international investors (1 per cent).
Other financing arrangements involve a $36.9 million concessionary loan from CDC and $465 million in loans from the World Bank-funded public-sector energy development fund. Approximately $166 million is in the form of standby funds.
Construction of the 1,292-MW plant is continuing on schedule, with the first of the four power units due to become operational by mid-1996. The whole project is scheduled to finish by March 1997 (MEED 26:8:94, 1:7:94).