Hascol Petroleum Limited (HPL) and its Dutch shareholder — Vitol — have tabled an Rs. 54.5 billion debt settlement owed to various banks, reported a national daily.
As per documents issued to different banks, the corporation has devised a detailed strategy to get back into the game and clear its name after suffering substantial losses in 2019.
The documents explained that Hascol’s total residual debt is Rs. 54.5 billion, of which up to Rs. 9 billion will be supplied jointly by two banks as an active working capital facility that will be carved out for the company’s activities.
More details on the matter suggest that the remaining debt of Rs. 45.5 billion would be reduced by 15 percent — or Rs. 6.8 billion — through a debt-equity swap that would be provided to all remaining debt participants in proportion to their participation. According to the financial restructuring plan, the unsubscribed share would be offered to other lenders or become part of the residual debt.
In extension, Hascol wants to issue outstanding shares worth Rs. 8 billion as part of this proposal to inject additional money into the company. The funds would be used to lower the remaining debt of Term Lenders who agreed to reestablish their working capital limits to the extent of their modified amount. Vitol would continue to provide a minimum $12 million Open Credit facility and a $15 million Hold Cover on purchases under the terms of the deal.
Moreover, the company is proposing the bank and Vitol facilities’ LC (letter of credit) payment terms be the same as 60 days, with Vitol Dubai maintaining a minimum stake of 40 percent in Hascol until at least 50 percent of the Residual Debt was repaid. The documents added that Vitol would cover any shortage in working capital until December 2026 and that 40 percent of the Residual Debt — when repaid — would be plowed back into the working capital facility as an incremental LC facility.
As is the case with majority shareholders, Hascol’s procurement is being proposed for facilitation through a tendering process, subject to Vitol’s Last Right of Refusal, as stated in the existing Supply Agreement between Vitol and Hascol.
In the near future, Hascol plans to liquidate its lubricant plant and three Port Qasim land plots in 2022, with the proceeds reinvested in the corporation. It should be noted that the assessed value of the three sites at Port Qasim is Rs. 1.309 billion.