Islamabad February 15 2023: Hub Power Company Limited (HUBC) to hold Extraordinary General Meeting (EOGM) on 20th February 2023 to extend the Company’s debt service undertaking obligations under CPHGC’s financing documents specified under the Completion Guarantee (CG) dated 24 October 2017, as amended and restated from time to time, until the financing received by CPHGC from its lenders is fully repaid.
The Company through its wholly-owned subsidiary, Hub Power Holdings Limited (“HPHL”) and its Chinese partner, China Power International Holding Limited (“CPIH”), through its wholly owned subsidiary China Power International (Pakistan) Investment Limited (“CPIPL”), has formed a company by the name of China Power Hub Generation Company (Private) Limited (“CPHGC”) in September, 2015. The principal activities of CPHGC are to develop, own, operate and maintain a 2×660 MW coal fired power plant each within one facility along with a jetty and ancillary facilities at the Hub Plant Site in the province of Balochistan Pakistan (‘Project’).
HPHL owns 47.5% shares in CPHGC of which 1.5% would be transferred to Government of Balochistan, as per the Memorandum of Understanding dated December 23 2016. As a condition precedent to making finance facilities available to CPHGC for the development of 2 x 660MW (gross) coal-fired power plant and related facilities in Hub, Balochistan Province, Pakistan, the Company had sought approval from its shareholders via its Extraordinary General Meeting held on May 25 2017 as required by the lenders of CPHGC to enter into a deed of completion guarantee and pursuant thereto a guarantee/standby letter credit for an aggregate amount of US$150 million or equivalent PKR (the “Approved Limit”) to guarantee an investment in the form of equity or subordinated debt (either directly or through HPHL) to (a) satisfy the funding shortfall, if any, in CPHGC to achieve completion of the Project to the satisfaction of the lenders; and (b) repay all principal, interest, fees or any other amounts that may fall due by CPHGC under the finance documents to the finance parties. The guarantee/standby letter of credit expires on February 23 2023. If the guarantee is called it would be booked by CPHGC either as equity or subordinated loan, subject to CPHGC Board and Lenders approval.
In order to release the Company from the requirement to maintain the standby letter of credit, it has been agreed that the Company, via a deed of undertaking, shall extend its existing obligation to pay any amount proportionate to its shareholding in CPHGC, up to a maximum of USD 150 million, due from CPHGC to the relevant lenders following the exercise of any remedy by CPHGC’s lead lender, China Development Bank (“CDB”), under CPHGC’s financing documents specified in clause 5 of the Completion Guarantee (“CG”) dated 24 October 2017, as amended and restated from time to time, between CPHGC, CPHGC’s sponsors and shareholders and CDB, until the financing received by CPHGC from its lender’s is fully repaid.
The Company requires approval from its shareholders to extend its obligations under clause 5 of the CG until the financing received by CPHGC from its lender’s is fully repaid. Accordingly, approval is being sought from the members of the Company for the aforementioned extension.
The investee company has generated profits of PKR 107,502 million up to 31 December 2022, 46% of which accrues to the Company as its share of profit from the investee company after accounting for the GOB share.
