KARACHI: Taj Gasoline Ltd, a private oil marketing company (OMC) operating 61 retail sites in Sindh, has submitted a public announcement of intention to buy at least 41 per cent shareholding of Hascol Petroleum Ltd, a troubled player in the downstream industry.

AKD Securities, which is acting as manager to the offer on behalf of Taj Gasoline, said on Wednesday the intended acquisition is through a proposed subscription of new shares by way of fresh equity injection. The firm plans to buy an undisclosed number of additional shares at a later stage from minority shareholders by way of a public offer. Under the prevailing rules, the public offer will be made at a price equal to, or higher than, the rate offered to the majority shareholders.

Shares of Hascol Petroleum, priced Rs5.71 apiece at the close on Wednesday, are trading on the defaulters’ counter of the Pakistan Stock Exchange.

Taj Gasoline promises fresh equity as Hascol tries to restructure its debt

The company has been in trouble since 2018 partly for making inaccurate entries in its financial accounts. It’s been in negotiation with all its lenders to restructure its entire debt of Rs54 billion. It’s now in the middle of seeking approval from creditors for its plan to rehabilitate the company through “restructuring/rescheduling, settlement and repayment” of financial obligations.

An injection of fresh equity, roughly Rs2.34bn for a 41pc stake at the going rate, is likely to help restore the confidence of creditors.

The restructuring effort aims at replacing short-term expensive debt with long-term affordable debt as well as some new equity. The company’s current liabilities outstrip current assets by a wide margin, which reflects poorly on the company’s ability to pay off its loans that’ll fall due in the short run.

The company’s net consolidated loss amounted to Rs9.4bn for the first nine months of 2022 versus a loss of Rs4.3bn a year ago.

The company’s major shareholder is Swiss energy giant Vitol Group, which increased its equity stake from 25pc to 40pc in 2020.

As for Taj Gasoline, the firm is part of the Taj Group, which also runs the auto dealership business with Indus Motor Company Ltd by the name of Toyota Sukkur Motor along with restaurants and hotels under the names of Royal Taj, Piatto, YELO and Hotel One.

Its net sales in the first six months of the ongoing fiscal year amounted to Rs25.9bn as opposed to the full-year revenue of Rs30.2bn in 2021-22, according to the financial accounts of the private company.

Published in Dawn, June 15th, 2023