KARACHI: Hascol Petroleum Ltd said on Monday it’s appointed Topline Securities as its strategic adviser to determine, evaluate and advise on “strategic options” to arrange equity investors as part of the company’s rehabilitation plan.

Speaking to Dawn, JS Global Assistant Vice President Waqas Ghani said the company’s rehabilitation plan consists of restructuring the existing loans as well as raising fresh equity at the same time.

“The proposed plan will require an injection of Rs17bn,” he said.

The oil marketing company has been in a financial mess since 2018. Its revenues have plummeted, losses risen and loans skyrocketed, sending its share price down from over Rs300 four years ago to less than Rs7 apiece now.

Mr Ghani said the rehabilitation plan has four components. One, converting Rs20 billion into a long-term loan with a grace period and a waiver for interest charges. Two, restoring Rs20bn in working capital lines to support oil imports. Three, settlement of banking loans to the tune of Rs15bn at the net present value of the long-term loan with upfront payments. And four, timely repayment of finance lease arrangements.

Based on a corporate briefing by the oil marketing firm held at the beginning of September, Mr Ghani said the firm’s management believes it’ll stay a “going concern” on the back of “continuous support” from Vitol Group, a major shareholder that increased its equity stake from 25pc to 40pc in 2020.

The unconsolidated loss of Hascol Petroleum for January-March was Rs2.3bn, up 2.6 times from a year ago. Net sales dropped 42.4pc year-on-year to Rs12.6bn. Its net loss amounted to Rs7.57 billion for calendar year 2021 versus a net loss of Rs23.54bn in 2020.

The company also discovered last year “inaccurate entries in its 2019 accounts” and subsequently restated its results from 2018 through 2020.

Regulatory actions against the company in Khyber Pakhtunkhwa for unauthorised storage and selling of petroleum products marred its reputation last year. The company also attracted unfavourable attention from investors after a series of abrupt resignations by auditors as well as members of its board and senior management came to the fore last year.

Its share price increased 0.77pc to Rs6.55 on Monday.

Published in Dawn, September 27th, 2022