Hi everyone! I hope you are all doing well. Welcome back to another blog. This article will discuss the topic in detail “Power Cement Limited Implements Debt Reprofiling for Rs. 11.9 Billion”. Power Cement Limited (PSX: POWER), a leading cement company in Pakistan, has officially announced its strategic move to re-profile its long-term obligations. With an outstanding debt of Rs. 11.9 billion, the company has taken this proactive step in response to the prevailing economic conditions.
This decision reflects the company’s commitment to optimizing its financial position and adapting to the challenging market dynamics. By taking this prudent measure, Power Cement Limited aims to strengthen its financial stability and ensure sustainable growth in the face of ongoing economic uncertainties.
The local syndicate of banks has reached a favorable agreement on the long-term debt, including the following key terms:
- The parties involved have reached an agreement to reduce the originally scheduled four biannual principal repayments, which were planned from July 2023 to January 2025, from Rs. 1.19 billion to Rs. 119 million each. The primary objective of this adjustment is to alleviate the repayment burden during this specific period.
- Two biannual principal repayments falling due in July 2025 and January 2026 will also be reduced from Rs. 1.19 billion to Rs. 298 million each. This reduction aims to provide further financial flexibility.
- The remaining principal amount of Rs. 10.8 billion will be paid in eight equal biannual installments of Rs. 1.35 billion each, starting from July 2026 and continuing until January 2030. This extended repayment plan ensures a more manageable payment structure.
- In the previous arrangement, the Diminishing Musharakah had a full repayment schedule set for January 2028. This extension allows for a longer repayment period and better cash flow management.
- Furthermore, starting from July 2023 and concluding in July 2026, there will be a reduction of 100 basis points in the profit margin of this Diminishing Musharakah for a duration of three years. This adjustment aims to provide a more favorable lending environment for the borrowing party.
Despite the significant challenges posed to the Company as a result of prevailing macroeconomic factors, including market volatility and economic downturns, the Company unwaveringly upholds its steadfast commitment to diligently maximize shareholders’ value. Moreover, it consistently strives to minimize the adverse effects caused by these unfavorable macroeconomic conditions through proactive measures and strategic decision-making.
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