- CPHGC had served notice to Hubco for encashment of a Standby LC worth $150 million
Hub Power Company Limited (Hubco) has initiated legal proceedings against China Power Hub Generation Company Limited (CPHGC) with regards to encashment of a Standby Letter of Credit (Standby LC) worth $150 million.
“Hubco, to safeguard interests of its shareholders, on advice of its legal counsel has initiated legal proceedings against the encashment notice," the company said in a notice sent to the Pakistan Stock Exchange (PSX) on Thursday.
“We are pleased to inform that the court has issued summons to the impleaded parties in the matter,” it added.
On Wednesday, CPHGC, a joint venture of China Power International Holdings Ltd (CPIH) and Hubco, served a notice to Hubco for the encashment of the Standby LC.
Hubco, as a joint venture partner and the Pakistani sponsor of CPHGC, had provided security in the form of the Standby LC in favour of CPHGC, which expired on November 23, 2022.
At the time, Hubco had said that being the largest independent power producer in Pakistan, it remains “committed to providing the country affordable and uninterrupted energy and taking any and all necessary actions to protect the best interests of its shareholders”.
The Standby LC is commonly used to cover the risk of a contract party not fulfilling agreed obligations, for instance, failure to pay or deliver. It can be used in open account trade as well as a complement to collections and documentary credits.