Foreign interest: KESC’s lenders to turn debt into equity

IFC, ADB to invest $50 million in shares of power utility.

KARACHI: The Karachi Electric Supply Company (KESC) has announced that two of its debt financiers, International Finance Corporation (IFC) and Asian Development Bank (ADB), which have lent $275 million, have expressed their intention to partially convert their debt into equity.

In a statement issued here on Thursday, KESC said each of the two institutions would invest up to $25 million in common shares of the power utility, translating into equity of $50 million.

According to the loan financing agreement signed by IFC – a member of the World Bank Group – and ADB with KESC in 2010, the two institutions have the right to convert up to $50 million of their debt into equity before December 31, 2012.



KESC management said this positive development, where two leading international financial institutions were geared to become shareholders in KESC, was a reflection of their confidence in the turnaround being made by the power utility.

“The direct and immediate impact of the conversion of this loan facility into equity will mean significant reduction in KESC’s debt, not only translating into greater financial leverage but will also mean substantial savings in terms of financial charges,” KESC said.

Published in The Express Tribune, November 30^th, 2012.