PACRA Maintains Entity Ratings of K-Electric Limited
Owing to pending notification of Multi Year Tariff (MYT) for the period from July 2016 onward, K-Electric Limited (KE) from time to time has obtained extension from SECP for holding AGM for 2017 and 2018. In application to Pakistan Stock Exchange dated May 28th 2019, K-Electric informed that following the withdrawal of case before the Sindh High Court, Ministry of Energy (MoE) has notified long standing MYT on May 22nd, 2019 for the period of seven years applicable from July 1st, 2016 to June 30th, 2023. The AGM for approval of accounts for the year ended 30th June, 2017 and 30th June, 2018 to be held, with SECP's direction. Furthermore, as per the announcement in Pakistan Stock Exchange dated June 27th, 2019, meeting of KE's Board of Directors will be held on July 04, 2019 to consider the Financial statements for the year ended 30 June, 2017.
The company lately appointed M/s. A.F. Ferguson & Co, Chartered Accountants and M/s. BDO Ebrahim & Co, Chartered Accountants as statutory joint auditors of the company for FY17.
The management has represented that AGM of the company for 2017 would now be convened after the BoD meeting.
In the announcement (December 24th, 2018), K-Electric has notified that they have received fresh Public Announcement of Intention from Shanghai Electric Power Company Limited to acquire up to 66.4% voting shares of K-Electric Limited. Arif Habib Limited, acting as a manager to the offer for this acquisition, had requested the extension of 90 days in making the Public Announcement of Offer which was to be made by June 23rd, 2019, and now by virtue of this extension duly approved by SECP may be made till September 21st, 2019.
Management accounts reflect sustained business and financial risk profile of the entity. However, PACRA would continue to monitor the developments and will update its rating opinion accordingly.
K-Electric, a vertically-integrated power utility, has been in operations for more than a century. At end-Mar19, KES Power Limited (KESP) held 66.4% share in KE, while Government of Pakistan owned 24.4%. KES Power majority is owned (53.8%) by Abraaj Capital (Private Equity Group) with the balance held by a group of investors (Al Jomaih, Saudi Arabia and NIG, Kuwait). KES Power has entered into a share purchase agreement with Shanghai Electric Power Company Limited (SEP) for sale of up to 66.4% shares of KE against a consideration of US$ 1.77bln. The transaction will close once customary closing conditions and requisite regulatory approvals are obtained.
KE has thirteen member board that comprises nine representatives of KES Power, three GoP members and one independent member. Mr. Ikram Sehgal has been recently appointed as the chairman of the board. Mr. Moonis Alvi appointed as CEO in June-2018, is associated with the company since 2008. He is supported by an experienced team.