KARACHI: Hascol Petroleum Ltd on Tuesday said it’s about to conclude negotiations with bankers to address its “heavy burden of accumulated debt”.

In a statement posted on the website of the Pakistan Stock Exchange, company chairman Sir Alan Duncan told investors that the troubled oil marketing company would soon be able to announce a restructuring agreement, which would involve replacing short-term expensive debt with long-term affordable debt and some new equity.

Hascol has been in financial trouble since 2018. Its revenues have dropped, losses mounted and loans risen, sending its share price down from over Rs300 three years ago to just over Rs6 apiece in recent days.

“If and when we succeed in this refinancing of the company, your board is confident that [the company will]… be restored as a profitable concern,” said Mr Duncan.

Its net consolidated loss amounted to Rs25.2 billion for calendar year 2020 versus a net loss of Rs35.1bn in 2019. It’s not filed its financial accounts for any post-2020 period. The company also discovered “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 also marred its reputation last year.

Referring to the build-up of liabilities on its balance sheet, Mr Duncan said servicing that debt has cost as much as the scale of the company’s losses. “Hascol’s main pressure is that it has been seriously constrained by tight liquidity,” he said after hailing the government’s “positive steps on forex protection and retail margins” that will help oil marketing companies.

The company’s short-term borrowings alone amounted to Rs33bn, down 10.7 per cent from the preceding year. According to the notes attached to the 2020 financial statements, these short-term loans from different banks were at interest rates ranging from one-month Karachi interbank offered rate (Kibor) plus 1.5pc to as high as Kibor plus 20pc.

As part of its plan to regain financial strength, the company is trying to convince banks to “partially convert their outstanding debt into equity” in order to reduce its “onerous debt service obligations”.

Besides, the management is looking for a “significant reduction” in its operating costs, recapturing its market share, disposal of non-core assets, shoring up of working capital and the raising of additional equity to reduce leverage.

Published in Dawn, December 8th, 2021

Opinion

Editorial

An inexplicable delay
03 Oct, 2022

An inexplicable delay

AFTER a flurry of activity a couple of months ago, geared towards filling the vacancies in the apex court — an...
Dire situation
Updated 03 Oct, 2022

Dire situation

If there is any time for the civilian leadership to show unity, it is now.
Russian annexation
03 Oct, 2022

Russian annexation

AS Russia and the West play a zero-sum game in Ukraine, Moscow’s official annexation of four Ukrainian regions it...
Spy games
Updated 02 Oct, 2022

Spy games

The audios leaked so far appear to have been carefully curated: they apply pressure but do not do major damage.
‘Geopolitical football’
02 Oct, 2022

‘Geopolitical football’

THE US-China rivalry is by all measures one of the globe’s most dangerous competitions for power and influence. ...
Fuel price reduction
02 Oct, 2022

Fuel price reduction

ISHAQ Dar is back; so are his signature policies. The reduction of a little over 5pc in fuel prices announced by him...