Cairo (APD) - Orascom Construction Industries (OCI) has received approval from the Securities & Exchange Commission of Pakistan to convert $19.2 million in debt it had purchased early this year into equity, the company said in a statement Wednesday.
OCI has secured shareholders' approval for the debt-to-equity conversion. The conversion which will take place at par value will raise OCI's stake in Pakistan Cement Company (PCC), formerly known as Chakwal Cement Company, to reach 60.6%, up from 52.5%.
"Our Pakistani subsidiary is scheduled to start operations in mid 2006. We believe strong growth opportunities lie ahead in the Pakistani cement market. Our appetite for additional equity in this project reflects our confidence in the growth prospects of the Pakistani economy," said Nassef Sawiris, OCI Chief Executive Officer.
In order to complete the construction of the new cement plant, Pakistan Cement Company (PCC) has signed agreements with a syndicate of 11 Pakistani banks and the Eksport Kredit-Fonden (EkF), the Denmark-based international export credit agency, for the equivalent of $130 million in limited recourse project finance debt which will be provided in Pakistani Rupees.
The syndication of Pakistani banks will provide $80 million in debt finance to be repaid over a period of seven years with a grace period of two years.
EkF has agreed to guarantee $50 million in debt finance which will also be provided by three Pakistani banks to finance additional importation of equipment and instrumentation required to complete the assembly of the plant. Moreover, the EkF guaranteed portion of the loan will be repaid over a period of eight years with a similar grace period of two years.
Pakistan Cement Company owns the property, plant and equipment of a 2.2 million ton per year cement plant supplied by F.L. Smidth of Denmark located along the Lahore-Islamabad highway in the Punjab Province of northern Pakistan.
Demand for the cement in Pakistan was up 20% during the nine months ended March 31, 2005, reflecting increased domestic consumption, in addition Pakistan is currently the main source of cement for the reconstruction process in Afghanistan. [FC]By Eman Wahby
© APD (Arab Press Digest) 2005
