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Monday, September 27th, 2021

Karachi Stock Exchange (Guarantee) Limited’s listing of privately placed term finance certificates of Rs. 2 Billion of Engro Fertilizers Limited under the Regulations

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Karachi: The Karachi Stock Exchange is pleased to notify the listing of Privately Placed Term Finance Certificates (TFC 5) of Rs. 2 billion of Engro Fertilizers Limited under the Regulations Governing Over-The-Counter (OTC) Market of the Exchange.

The Term Finance Certificates is being listed under Regulation No. 3(II) and Schedule III of the Regulations relating to listing of Debt Market Securities issued to Qualified Institutional Buyers (QIBs) through Private Placement.

The said Term Finance Certificates will be listed on the Exchange w.e.f. Monday, July 11, 2011 and trading in the Term Finance Certificates will commence one day after the date of formal listing i.e., from Tuesday, July 12, 2011 as required under Clause No.4 (iv)of Schedule III of the Regulations.

The trading in the Term Finance Certificates will take place between the members outside the system and shall be reported to the Exchange via Negotiated Deal Market (NDM) and settlement of trade will take place on counter party basis.

The eligible Investors, who qualify the criteria of Qualified Institutional Buyers (QIBs) as defined under Regulation No, 2(n) of the Regulations are allowed to trade In the TFC 5 of the Company.

The Marketable Lot of the Term Finance Certificates will be the TFCs of Rs. 1 million.

The National Clearing Company of Pakistan Limited vide Its letter No. NCCPL/CS/512/11 dated June 28, 2011 has assigned the Security Symbol / Company Code “EFLTFC5” to the TFCs of the Company.

IGI Investment Bank Limited has been appointed as the Market Maker and trustee of the Issue, which will quote bid / offer spread for the Term Finance Certificates on daily basis and would intimate the KSE of any trade in the instrument through IGI Finex Securities Limited, Corporate Member of the Exchange, which would be available through website of the Exchange under the “Market Information” Menu item as OTC Sorips”

Noble Computer Services (Private) Limited has been appointed as the TFC Registrar.

Engro Fertilizers Limited

1. Transaction Summary

Engro Fertlizers Limited (Engro or the Company)

Subservient Rankings, Secured, Subordinated, Callable, Rated, Term Finance Certificates (“TFC 4”) issue with a put Option, having a lower ranking status in respect of security and repayment of principle and profit to all present and future local and foreign senior secured debt having first pari passu charge (senior Debt) and a higher ranking than all unsecured debt sponsors loans and all equity instruments undertaken by Engro (“Issue”).

The Issue amount was utilized to partially finance urea expansion project.

Structuring Agent and Lead Advisor
Habib Bank Limited (“HBL”)

Joint Lead Arranges
Habib Bank Limited and Allied Bank Limited (“ABL”)

Issue Amount
Upto PKR 4,000,000,000/-

Issue Date
March 18, 2008

Perpetual, subject to the Call or Put Option

Mark-up Rate
1-6 years: Base Rate + 170 basis points (“bps”): Thereafter, the pricing will increase by 20 bps for each subsequent year till the Issue is either called by the Company or put by the investors.

The Base Rate is defined as the 6 month Karachi Inter Bank Offer Rate (“KIBOR”). The KIBOR rate used for reference will be taken from Reuters page “KIBR” as published at 11:30 a.m. PST by the Financial Markets Association (“FMA”). For the purpose of this TFC Issue the daily average of the “six months ASK” rate will be used. In the event that this rate is not published on Reuters on the rate fixing date or if less than 8 banks provide their rates for the KIBOR fixing, the same would be replaced with a relevant rate of a similar nature or an alternate basis would be agreed upon for determining the Base Rate. The Base Rate will be set on the last working day before the first disbursement and subsequently on the last working day at the beginning of each semi-annual period for the mark-up due at the end of that period.

In the event Engro fails to agree on an instrument or an alternate basis for the determining the Base Rate within thirty (30) days of receipt of the notice (“Notice”) by Engro from the Trustee, Engro shall prepay the entire outstanding TFC Amount within 90 days of the receipt of Notice along with any accrued periodic distribution and other charges and expenses.

Please note that the above stipulated mark-up will be paid on an IRR basis to the investors, i.e., in case of any mark-up payment deferral, the coupon paid for the subsequent period will be adjusted to ensure that the investors are paid the entire mark-up on an IRR basis.

Coupon Type and Frequency
Profit will be payable semi-annually in arrears on the principal amount.

However, in case sufficient cash flows are not available for servicing of all Senior Debt then outstanding, company will have the option of deferring coupon payment. Profit will be calculated on a 365-day year basis. The first such profit payment will fall due 6 months from the issue date and subsequently every six (6) months thereafter.

In case of Engro being unable to complete a coupon payment, in part or in full, on any coupon payment date, the unpaid portion of the coupon payment will be deferred and fall due on the following coupon payment date. Furthermore, the coupon payment for the immediately subsequent coupon payment date will be increased by Engro to the extent required to ensure that the investor spread will be maintained for the investor, taking into account the deferral of coupon payment or part thereof.

Principle Repayment

Principle Repayment will occur, in whole or in part, through the exercise of the Call Option only by the Company, or the put Option by the Investor.

Transfer Agent

Noble Computer Services (Pvt.) Limited

Call Option

The Issuer may call the Instrument on any profit (coupon) payment date after 60 months from the issued date, in whole or in part and in multiples of PKR 100 Mn, after providing 30 days notice to the Trustee.

Put Option

Each investor will have the option of a Put that can be exercised 120 months from the issue date or thereafter, by giving 60 (sixty) calendar days notice in writing to Engro. The investor will put the TFC to the Company at a premium of 0.10% to the principle outstanding plus accrued mark-up outstanding at the time of the Put. The Put Option will be exercised only on redemption dates, after providing 60 (sixty) calendar – day prior notice to the Company.

Market Maker

IGI Investment Bank


The instrument will be secured through a ranking charge created to ensure the investors have a claim on assets of Engro after the claim of the Senior Debt provider (s) is settled. Although investors will not have the right to accelerate the payment independently by calling an Event of Default, in case of enforcement of securities by Senior Debt provider (s) the investors will be required to be repaid after all obligation to Senior Debt providers have been met, which will be treated as a call by Engro.


The issuer shall, unit the Investment is outstanding:

i. Comply with all laws, regulations and directives applicable to its business:
ii. Permit the Lenders and / or their authorized representative to have access to its books, accounts and employees, contracts and substances:
iii. not allow any material change in the board or shareholding structure:
iv. maintain a debt equity ratio of 75:25 and after the expansion project has been completed, maintain DSCR of 1.1x, (Debt for the purposes of DSCR will also include coupon payments to investors, all loan facilities and any less payments coming due);
v. use cash flows, comprising of twelve (12) months consolidated EBITDA consisting of six (6) months actual EBITDA prior to markup payment and six (6) months projected EBITDA following markup payment less payment of tax made during previous six (6) months and projected to be made in the next six (6) months less any payment due to Senior Debt provider (s) inform of either principle or mark-up made during previous six (6) months the projected to be made in the next six (6) months, to services the mark-up on the TFC,

Negative Covenants:
The Issuer shall not:

i. Offer any cash dividends on the ordinary shares while the payment to TFC investors is not current;

Instrument Rating

“AA” (Double A)

Trustee to the Issue

IGI Investment Bank

Issuer’s Legal Counsel

Mohsin Tayebaly and Company (“MTC”)

Governing Law

This arrangement / structure shall be governed under the applicable laws of the Islamic Republic of Pakistan.

For more information, contact:
Muhammad Ghufran
Deputy General Manager – Companies Affairs
Karachi Stock Exchange
Tel: +9221 111 001 122
Fax: +9221 3241 0825, +9221 3241 5136


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