The $150 million encashment issue between Hub Power Company Limited (PSX: HUBC) and China Power Hub Generation Company Limited has finally been resolved after weeks of deliberations.
According to a stock filing, the encashment notice dated November 23, 2022, has been withdrawn and the Standby Letter of Credit (SBLC) has been extended on mutually agreed terms.
According to Arif Habib Limited, the development is material positive for HUBC as the uncertainty with respect to the encashment of SBLC has been put to rest.
To recall, HUBC gave a $150 million SBLC to guarantee an investment in the form of equity or subordinated debt to satisfy the funding shortfall, if any, in CPHGC. This was done to achieve completion of the project to the satisfaction of the lenders and to repay all principal, interest, fees, or any other amounts that may fall due by CPHGC under the finance documents to the finance parties.
Moreover, shares held by Hub Power Holding Limited (HPHL) in CPHGC were pledged in favor of the security trustee in order to secure the company and HPHL’s obligations under the financing documents of CPHGC.
At the time of filing this report, the scrip of the company was being traded at Rs. 63.85, up by Rs. 3.12 or 5.14 percent, and a turnover of 6,986,560 shares on Friday.
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