KARACHI: Troubled oil marketing company Hascol Petroleum Ltd said on Monday that Millat Energy Group is interested in buying 76 per cent of its “fully diluted share capital” through a subscription of new shares.

Fully diluted share capital reflects the total number of sha­res a company would have if all outstanding options and other rights to subscribe for — or conv­ert into — shares were exercised.

The latest disclosure by Hascol Petroleum follows its longstanding search for a potential investor that can inject fresh cash as part of a larger capital restructuring exercise aimed at ensuring the firm operates as a going concern.

Earlier in June, the firm announced Taj Gasoline Ltd, a private oil marketing company operating 61 retail sites in Sindh, was interested in buying at least 41pc shareholding in it by subscribing to new shares. However, the potential deal seems to have fallen through since Hascol Petroleum is still looking for investors.

The oil marketing company has invited Millat Global Holdings, which is the investment holding company of Millat Energy Group, to conduct due diligence and allowed it to access its VDR or virtual data room, which is its online repository of documentation with critical business information.

Hascol Petroleum 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 debt. 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.

The company’s current liabilities outstrip current assets by almost Rs90 billion, which reflects poorly on the company’s ability to pay off its loans that will fall due in the short run. The restructuring effort aims at replacing short-term expensive debt with long-term affordable debt as well as some new equity.

Shares of Hascol Petroleum, priced Rs8.87 apiece at the close on Monday, are trading on the defaulters’ counter of the Pakistan Stock Exchange.

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

Hascol Petroleum booked a net unconsolidated loss of Rs13bn in the first nine months of 2023 versus Rs9.5bn a year ago.

Published in Dawn, December 19th, 2023