Hascol moves forward with modified scheme to address debts

KARACHI: The board of directors of Hascol Petroleum Limited approved a modified draft scheme of arrangement (SOA) to deal with its debts on Monday, as the company with one of the biggest private sector defaults in Pakistan moved forward to please its creditors.

The cash-strapped firm had defaulted on whopping Rs54 billion debts, which led to investigations for “misappropriations” and “wrongdoings”. “We are pleased to inform that the Board of Directors at its meeting held on 13 March 2023 has approved a modified/updated draft Scheme of Arrangement prepared under Sections 279 to 282 and 285 of the Companies Act, 2017 (the “Modified Scheme”) which encapsulates certain amendments / suggestions proposed by the secured creditors of the Company,” it stated in a notice to Pakistan Stock Exchange.

Farhan Ahmad, Hascol company secretary, informed in the bourse notice that the modified scheme would be presented to the secured creditors for the requisite approval, followed by members of the company, after which the same would be filed/submitted to the High Court of Sindh at Karachi for necessary steps (or as otherwise advised by the company’s legal counsel).

The oil marketing company expects a positive impact of the SOA on its future operations and growth prospects. It’s major player in the petroleum industry, with a diverse range of products and services.

Hascol’s borrowing history began with Summit Bank in 2009, but it wasn’t until 2014 that the National Bank of Pakistan (NBP) entered the scene. In January, 2022, the FIA’s Commercial Banking Circle registered a case against 30 people, including former and current officers of the NBP and Hascol, on the basis of evidence found in an inquiry into a bank default, financial fraud, and money laundering of more than Rs54 billion by the petroleum company.

In December 2022, Hascol announced a meeting of creditors to seek an approval for its plan to revive the company through restructuring/rescheduling settlement and repayment of its financial obligations. The company says it has encapsulated the suggestions proposed by the creditors in the modified scheme.

Hascol was incorporated by Mumtaz Hassan Khan as a private limited company on March 28, 2001, for the procurement (local/import), storage, and marketing of petroleum, chemicals, and LPG. The company obtained oil marketing license from the Ministry of Petroleum and Natural Resources in the year 2005 and acquired assets of LPG licensed company in the year 2018.

It defaulted on its debts putting the minority shareholders’ money at stake, as its equity turned negative with billions of rupees losses annually.

Hascol filed a scheme of arrangement under which its debts could be formally restructured within the court system. On Monday, the company’s scrip at the bourse closed at Rs6.14, up 8.87 percent or Rs0.5 with a turnover of 42.4 million shares.