The Karachi Electric Supply Company (KESC) has launched the public offering of country’s first ever Utility Sector Retail Bond Issue titled as “KESC AZM TFC”. The Term Finance Certificates (TFCs) are instruments of redeemable capital as defined under section 120 of the Companies Ordinance.
This issue is listed, secured and rated, offered in multiple tenors having a total face value of Rs 2 billion and is available for subscription to the public for a three month period, starting from May 25 (2012) until August 24 (2012). Investments received would be utilized for financing KESC’s permanent working capital requirements.
The KESC AZM Certificate issue is the most flexible TFC issue in the country, available in maturities of 13 months (KESC AZM TFC 1), three years (KESC AZM TFC 2) and five years (KESC AZM TFC 3). Coupon/profit rates per annum are 13.00 percent p.a. payable monthly for the 13-month issue, 14.75 percent p.a. payable quarterly for the three years issue and 15.50 percent p.a. payable quarterly for the five years issue.
The total face value of the issue is Rs 2,000 million including a Green Shoe option of Rs 1,000 million. Total amount offered is Rs 300 million, Rs 1,200 million and Rs 500 million for 13 months, 3 years and 5 years issue, respectively. The minimum investment amount has been fixed at Rs 10,000 in order to allow for broad based participation in the venture. Principal repayment of the investment would be available at maturity. Early redemption option would also be available to investors subject to varying redemption charges and a 15 day prior notice. Each AZM TFC is secured by monthly collections from over 700 of KESC’s top corporate customers expected to provide over 10 times coverage on average on each monthly payment amount. The security also includes charge on fixed assets.
