Engro Polymer and Chemicals Limited (EPCL) have announced to place Islamic Sukuk Certificates of worth Rs. 8.75 billion at the Pakistan Stock Exchange.
The issue amount is up to Rs. 8.75 billion, which is inclusive of a Green Shoe option of Rs. 4.75 billion. The tenor will be of seven years and six months (7.5 years) starting from the issue date inclusive of grace period of five years. (5 years) The face value of each certificate will be Rs. 100,000.
The proceeds of the said issue will be utilized for consolidation and prepayment of existing long term debt of EPCL into a single instrument and term out a scheduled loan.
According to the notice, the said issue will be privately placed under Privately Placed Debt Securities’ Listings Regulations, relating to the listing of Debt Securities issued to Qualified Institutional Buyers (QIBs) through Private Placement.
The said Sukuk Certificates will be listed on the Exchange w.e.f. Friday, July 12, 2019, and trading in the Sukuk Certificates will commence on Monday, July 15, 2019, through Bond Automated Trading System (BATS).
Only the investors who qualify the criteria of Qualified Institutional Buyers (QIBs), as defined under regulation no 5C.2.1 of Privately Placed Debt Securities’ Listings Regulations are allowed to trade the Sukuk Certificates of the company. The market lot will be one certificate on the face value of Rs. 100,000/ each.
The profit rate will be determined under 3 months KIBOR(Base Rate)+ 90bps. The base rate is defined as Karachi Inter-bank offered rate prevailing on the Base rate-setting date. It will be set for the first coupon issue date and subsequently on the immediately preceding day before the start of each profit payment.
Profit will be payable quarterly in arrears calculated on a 365 day year basis on the outstanding principal amount.
The KIBOR rates used for reference will be taken from the Reuters page ‘KIBR’as published at 11:30 am PST by the Financial Markets Association(FMA).
It will be traded under the symbol of “EPCLSC” to the Sukuk Certificates of the company. Arif Habib Limited has been appointed as the Market Maker to the issue, which will provide two-way quotes on a daily basis with a maximum spread of 10% for the Sukuk Certificates, through BATS.
The financing is part of the company’s expansion plan for its production plant of polyvinyl chloride (PVC) – a chemical for the production of construction plastic products, including water and sewerage pipes, cables and consumer items like shoes and packaging films.
With the addition of the new plant, the total capacity of the company will go up from 100,000 to 295,000 tons per year. The expansion plan includes the production of other chemicals like VCM and caustic soda flakes, a new production line in its portfolio. With the issuance of the Sukuk, the company has achieved its goal of converting all its long-term debt into Islamic financing.