KARACHI: Fauji Fertiliser Company (FFC) will buy out the shareholding of Fauji Foundation (FF) and Fauji Fertiliser Bin Qasim Ltd (FFBL) in Foundation Wind Energy I and II, subject to regulatory approvals.

In separate notices to the Pakistan Stock Exchange (PSX) on Tuesday, FFC and FFBL told their shareholders about the transaction that will create synergies in the renewable energy segment within the Fauji group.

FFBL will sell its 35 per cent stake in Foundation Wind Energy I to FFC for Rs2.72 billion. Similarly, it’ll sell its 35pc shareholding in Foundation Wind Energy II to FFC for Rs2.74bn.

These are wind energy projects of 49.5 megawatts each. Set up at a cost of $125 million each with a capital structure of 75pc debt and 25pc equity, their annual profits amounted to Rs1.8bn and Rs1.7bn, respectively.

FFC will also buy 30pc and 20pc shares that FF currently owns in Foundation Wind Energy I and II, respectively. Therefore, total cash consideration for FFC, which includes the purchase of stakes from FF and FFBL in the two projects, will be a little over Rs14bn.

According to a note issued by Topline Securities, most of the cash received by FFBL will be utilised in retiring debt that cumulatively stands at Rs27bn.

“Liquidity issues have so far constrained cash payouts by these projects. Assuming a 100pc payout, it can add about Rs1.7 per share to FFC’s bottom line,” it said.

The share price of FFBL rose 2.2pc to Rs26.66 in anticipation of a cash inflow. The share price of FFC, however, dipped 0.46pc to Rs106.52 on the PSX.

Published in Dawn, June 30th, 2021