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April 4, 2018

Fauji Fertilizer plans $39mln investment in Thar Energy

 
April 4, 2018

KARACHI: Fauji Fertilizer Company (FFC) planned to invest $39 million in Thar Energy Limited (TEL), which is setting up 330 megawatts of coal-fired power project, a bourse filing said on Tuesday.

FFC convened an extraordinary general meeting of its shareholders on April 25 to approve the proposed investment, which will bring its total equity investment in TEL to $39 million, “which represents a 30 percent share of the total equity requirement of Thar Energy Limited based on the estimated project cost of $520 million and the debt to equity ratio of 75:25”, a notice to Pakistan Stock Exchange said.

Thar Energy was incorporated as a wholly-owned subsidiary of the Hub Power Company Limited to develop, own, operate and maintain a 330MW mine-mouth coal fired power plant to be established at Thar Block II.

Work has already commenced on the project, which is expected to be completed by December 2020.

FFC would invest $39 million in Thar Energy Limited by way of subscription of its shares at the rate of Rs10/share over the period required to achieve commercial operations. In April 2017, the board of directors of Fauji Fertilizer Company approved the investment in 30 percent shares of Thar Energy.

“Subsequently, in line with the board’s approved mandate, the shareholders’ agreement was signed by Fauji Fertilizer Company Limited, Hub Power Company, China Machinery Engineering Company and Thar Energy on March 15, 2018,” the notice said.

“Based on the provisions of the shareholders’ agreement and in line with board of directors’ approval, the company will have invested an amount of up to $10 million, prior to date of this (upcoming) extraordinary general meeting, in Thar Energy Limited which represents 30 percent shareholding of TEL’s current paid-up capital.”

After such investment, Thar Energy Limited and the company will have become associated companies.

Total funds expected to be contributed by all shareholders for achieving commercial operations of the project amount to $130 million, of which $39 million will be injected by Fauji Fertilizer and it will have the right to nominate two directors on the board of Thar Energy Limited.