Kapco mulls acquiring 17.37pc stake in Hubco

KARACHI: Kot Addu Power Company (Kapco), a power generation firm, is mulling to acquire 17.37 percent stake in Hub Power Company (Hubco), a bourse filing said on Thursday.

The proposed acquisition would cost Kapco approximately Rs24 billion based on Thursday’s Hubco’s share value of Rs119.98.

“Subject to requisite corporate and regulatory approvals, a strategic proposal is to be considered by the board of directors of Kapco, and if considered appropriate a bid will be submitted to acquire 172.582 million shares constituting 14.91 percent of Hubco, which are being offered by Dawood Hercules Corporation and an additional 28.502 million shares constituting 2.46 percent of Hubco being offered by some other shareholders,” Kapco said in a notice to Pakistan Stock Exchange.

Elixir Securities, in a report, said the proposed acquisition might imperil dividend and add to debt burden. “In the absence of sufficient cash on Kapco’s books, we believe the transaction, if it were to go through, would have to either wholly financed by debt or a mixture of internal cash flows by restricting dividends and debt,” said the brokerage.

Kapco, operating a multi fuel-fired power plant with 1,600 megawatts of production capacity in Punjab. Allied Bank Limited holds 9.68 percent in Hubco, followed by Fauji Foundation (8.5 percent) and National Bank of Pakistan (4.99 percent) as of June 30, 2016.