KARACHI, Dec 20: The International Finance Corporation (IFC) and the Asian Development Bank (ADB) have exercised their option to partially convert their debt into equity.

The cumulative value of shares issued amounts to $50 million, with each picking one half of the total stock. An earlier announcement by the power utility on Nov 29 had confirmed that the two debt financiers of KESC had expressed their intention to exercise their right of conversion. According to a May 5, 2010 agreement, the two institutions were vested with the right to convert up to $50 million of their debt into equity before Dec 31, 2012.

A notice at the KSE on Thursday, by the KESC stated "We are pleased to confirm having received a formal notice from IFC and ADB pursuant to Loan and Subscription Agreements dated May 5, 2010 between the KESC and IFC and KESC and ADB to exercise their option to convert their loan into additional shares having a cumulative value of Pak Rupees, equivalent to $50 million to be converted at exchange rate prevailing on the date of subscription”.

The conversion related to the original $275 million financing facility provided to the KESC. "This debt financing was provided by the two institutions to partly finance KESC's 560 MW BQPS-II, which has successfully been installed and commissioned in the middle of this year, ahead of its planned schedule”, an analyst said.

The disclosure of the debt financiers’ exercise of option was made at the KSE by the company to comply with the ‘material information’ clause of the Listing regulations.

However, investors at the exchange took the news in stride with the KESC stock closing slightly higher by 16 paisa to Rs6.27 on trading in 2 million shares on Thursday.