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HUBC may provide new SBLC to CPHGC within ten days - Mettis Global Link

HUBC may provide new SBLC to CPHGC within ten days – Mettis Global Link

November 24, 2022 (MLN): The Hub Power company limited (HUBC) may provide a new Standby Letter of Credit (SBLC) worth $150 million to China Power Hub Generation Company (CPHGC) within ten days of the encashment notice.

Speaking to MG Link News Rao Amir Ali Research Analyst at Arif Habib Limited said, HUBC will issue a new SBLC to CPHGC within ten days. In case of non-issuance of new SBLC, banks will disburse $150mn to CPHGC.

“In this case, a liability of the same amount will be booked on the books of HUBC against a receivable from CPHGC. We believe, CPHGC will repay the SBLC amount to HUBC after the Project Completion Date (PCD)”, he added.

To recall, CPHGC has not achieved PCD yet.

While assuming zero spread he was of the view that the company cannot charge a markup lower than its own cost from its associate on a subordinated loan, as per regulations.

As per the notice issued by HUBC to PSX on Wednesday, “CPHGC has served encashment notice worth $150mn under the SBLC, on the issuing bank provided by HUBC expiring on 23rd Nov’22”.

To note, the HUBC had provided SBLC with an aggregate amount of $150mn to guarantee an investment in the form of equity or subordinated debt to satisfy the funding shortfall.

Copyright Mettis Link News

Posted on:2022-11-24T11:57:06+05:00

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