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TeleCard Set to Restructure TFC Loan

Creditors are expected to soon restructure TeleCard’s outstanding TFC loan of Rs. 700 million, which would pave the way for the regulatory approvals for the planned IPO of its subsidiary, Supernet, the company sources said. The company had raised Rs. 2.4 billion through its TeleTFC, paying back Rs. 1.7 billion to the creditors so far.

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The company has been in discussions with its TFC holders for the said restructuring for the last few months. “The company has the support of its board and the TFC holders for the restructuring and is now in a position to quickly complete the formalities,” they said.

A recent bourse filing by the company, stating that it is in a process of renegotiation its TFC with the creditors, had spawned concerns among investors about its financial capacity to settle the outstanding obligation, with its share losing more than 20pc of its price. There were also concerns that it would delay its upcoming plans listing its subsidiary on the PSX.

“Telecard decided to explore the option of a separate listing of Supernet Limited, its 100 percent owned subsidiary, in April of this year. We see that an IPO of Supernet will help the company in accelerating its growth trajectory, expanding its business lines, and creating value for all stakeholders.”

“TeleTFC has been an outstanding issue for a while. The issue was previously restructured in January 2016 with an expectation that it would be repaid in full by December 2020. However, due to challenging business circumstances faced by the company in that period, the liability could not be discharged,” the company sources claimed.

“The company has the ability to pay the outstanding amount out of its own consolidated cash flows and expects to do so under the restructured terms. Furthermore, the IPO of Supernet (SNL) is in line with our efforts to expand the business, seek new revenue streams and create fiscal space and value for its stakeholders.”

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In the last two years, all the listed IT companies, including TeleCard, have performed well. TeleCard’s share price has gone up from a low price of Rs. 1.35 to a 52-week high of Rs. 25.1. “TeleCard and its subsidiaries have expanded their business to provide voice, high-speed data, and internet connectivity through multiple technologies and offer Cyber Security Solutions, Cloud Services, and IT Infrastructure Services, Security Surveillance, and Power Systems to its customers. The Telecard group is well poised to go beyond connectivity and is well placed to take advantage of global digitalization and emerging technologies and business.”

TeleCard’s financial performance has improved substantially over time, evident from a negative EPS of Rs. 0.25 in FY20 to an EPS of Rs. 1.12 in the first three-quarters of FY21 to March. “Pakistan is experiencing exponential growth in Digital Startups and Fintech with huge export of services potential. Coupled with a pool of talented human resources in IT and digital technologies and services, the country is experiencing a renewed interest in startup funding through foreign funds and interest in BPO outsourcing. All this requires digital infrastructure and backbone. TCL Group has positioned itself to be an enabler for those enterprises interested in being part of this upswing in digitization and BPO outsourcing services.”

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