KARACHI, Sept 13: As many as 19 shareholders have declared their intent to fight for a seat on the 12-member board of directors of the Hub Power Company Limited (Hubco), an announcement made by the company on Tuesday said. All of which, market participants say could suggest that a hostile take-over bid may actually be in the offing.
It is customary for as many members as the available vacant seats on the board of directors of a company to stand up to be elected. A departure from the practice, particularly in large entities raises eyebrows.
In case of Hubco, the market has been rife with rumours that ‘locals’ may venture to occupy the majority seats (seven of the 12 in this case) so as to wrest control of Pakistan’s largest Independent Power Plant (IPP) from the foreign sponsors.
A notice released at the stock exchange by Hubco on Tuesday, named the following 19 persons who have filed notices of their intention to offer themselves for election as directors at the shareholders’ meeting scheduled to be held on September 20:
Mohammmed A. Alireza HI; Yusuf Ahmed Y. Alireza; Kamal Afsar; Dr Fereydoon Abtahi; Farrukh Shauket Ansari; Robin A Bramley; Malcolm P. Clampin; Najam-ul-Hassan Farooqi; Taufique Habib; Vince R. Harris; Shahzad M. Hussain; Arif Ijaz; Qaiser Javed; Edward Metcalfe; Ali Munir; S. Nizam Ali Shah; M. Ashraf Tumbi; Yutaka Ueda and Babur Zahiruddin.
Corporate watchers who have been following the events mention that three years ago when the directors were last elected to the board, the two foreign sponsors -- International Power and Xenel -- together commanded a total of 33 per cent of the stock. The IP held 240 million shares representing 21 per cent and Xenel 140 million shares with 12.1 per cent of the voting power.
But since that date, the holdings of the foreign sponsors have stood considerably diluted. At the time of offer for sale of shares to the public in 1994, the aggregate equity stake of the two foreign sponsors was 404 million shares.
By virtue of their holdings in the last elections, the sponsors captured eight of the 12 seats on the board of directors. The board comprises 15 directors, but two of them are nominated by the government of Balochistan and the National Bank of Pakistan and one seat is occupied by the company’s CEO.
Among the local institutional equity holders in Hubco, the company had last listed Fauji group with 8.5 per cent; NIT 3.8 per cent; MCB 2.3 per cent; Habib Bank AG Zurich 1.8 per cent; Mitsui & Co 1.8 per cent; Ishikawajimi-Harima 1.8 per cent; EOBI 1.7 per cent and “others” 44.8 per cent shares.
Those in the knowledge of developments suggest that it would nearly be impossible for a single local shareholder/financial institution to wrest control of 1,200-mw giant power plant, from the foreign investors.
A consortium of big ‘local’ stakeholders, which would have to include financial institutions, might join hands for majority seats on the board. “But by just looking at the list of contestants, it is difficult to separately identify candidates who may be representing the foreign and local shareholders.” said a person among the interested parties.
Hubco has a huge number of over 17,855 shareholders on its list of members. Individual investors who could be as many as 17,000 command 35 per cent of the equity interest and therefore that much of the voting power.
It is still a week away from the elections and there are as yet no hints of a proxy war. A member with an eye on such developments thought that since the ‘locals’ with large chunk of equity holdings belonged to several visibly unrelated groups/financial institutions, the foreign sponsors could be banking on a split within the ranks of the rivals.
