The issuance of shares to NBP constitutes debt equity swap, and is part of the re-profiling package agreed between PCL and NBP in respect of former NDFC and NBP loans.
The company is expected to pass a resolution regarding this issuance in its extra ordinary General Meeting scheduled to be held on August 4, 2004.
The company will issue, subject to the approval of Securities & Exchange Commission of Pakistan, a total of 11.6 million ordinary shares of Rs 10 each with the premium of Rs 13 ie Rs 23 per share.
The salient features of the re-profiling package include reduction in mark up rates of former NDFC and NBP loans from 18.15 percent to 6.5 percent and 15.69 percent to 6.5 percent per annum respectively.
The package also envisages 21/2 years grace period allowed to the company to enable it to expand its capacity to 6350 tonnes per day from the existing 2000 tonnes, after which PCL will be become one of the few cement companies of the country having production capacity of over 2 million tonnes per annum.
The new production line is expected to start trial runs from July 2005, whereas cement production is scheduled to commence from October 2005.
According to details of the package, Saudi Pak Industrial & Agricultural Investment Co (Pvt) Ltd has also re-profiled their loans by reducing mark up rates from 13 percent to 5 percent per annum during the grace period, and to 6.5 percent after grace period.
While, Asian Finance & Investment Corporation has also agreed to re-profile their loans by allowing 3 years grace period. Their mark up rate is already lower than the revised mark up rates of local currency loans. Moreover, Asian Development Bank has also agreed in principle to re-profile their loans by allowing a grace period of 2 years.
The Company has planned to complete expansion within a record period of 15 months from July 2004. PCL will be the first cement company to capitalise on the construction boom in the country by expanding its capacity to two millions tons per annum.
PCL was incorporated in 1988 and commenced commercial operations in November 1994. The Project was financed by Asian Development Bank, Nissho Iwai Corporation of Japan, Asian Finance & Investment Corporation, Singapore, former NDFC, Bankers Equity Ltd, Industrial Development Bank of Pakistan and Saudi Pak Industrial & Agricultural Investment Co (Pvt) Ltd.