KARACHI, Nov 27: The subscription list to the Term Finance Certificates (TFCs) of Engro Chemical Pakistan closed at the Karachi Stock Exchange on Tuesday; the offer of Rs500 million in TFCs had remained open for two days: November 26 and 27.

The company had offered TFCs valuing Rs400 million for private investors and Rs100 million for general public.

“It is the first time in its 32-year history that Engro has issued a listed debt instrument to raise medium term capital”, Engro said in a statement on Tuesday.

The company stated that a contributory reason that Engro had opted to go the TFC route rather than straight institutional debt as in the past, was because it was keen to play a participatory role in the development of the local debt capital market. The current TFC should pave the way for future offerings by Engro as the company had an appetite and need for funds to finance various projects under contemplation, the company said. The strategy was also in line with the government’s desire to see a more active debt capital market.

Salient features of the TFC include a tenor of five years, with principal amount being redeemed from the fourth year in four equal semi-annual instalments. The profit rate on the semi- annual coupon is a floating rate structure with a minimum rate of 13 per cent per annum and a maximum of 17 per cent per annum, based on the auction results of 5-year PIB bonds. Engro also maintains an option to call the TFC any time after three years at its par value.

Engro observed that the proceeds from the TFC issue would be utilized in the company’s capital expenditure and investment programme. “Engro has an annual capital expenditure of $5 million and is also currently carrying out an Energy Conservation Project, a two-year programme to improve its urea plant’s overall efficiency,” the company said.

Engro noted that during the past decade, the company had invested more than Rs10 billion mainly on expansion of its Daharki plant site and was investing in its joint venture companies, Engro Asahi Polymer and Chemicals Ltd and Engro Vopak Terminal Limited.

Engro also invested in establishing an NPK fertilizer facility at Port Qasim, which became operational during the current year, the company stated.