The board of directors at Hascol Petroleum Limited has approved the plan for rehabilitation of the company through restructuring and settlement of liabilities, informed the company in a notice to the Pakistan Stock Exchange (PSX) on Wednesday.

“The Board of Directors of Hascol Petroleum Limited, in its meeting held yesterday, has approved the plan for rehabilitation of the company through restructuring and settlement of liabilities of the company as per proposal prepared by the management,” read the notice.

The company’s board also approved draft of the letter to be sent to all secured creditors/banks/ financial institutions conveying the rehabilitation plan and the process intended to be followed by the company for implementing the same i.e. through a Scheme of Arrangement to be presented to the High Court of Sindh at Karachi under Section 279-282 of the Companies Act 2017 ("Scheme").

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“The board has further given the management a go-ahead to prepare the scheme on the basis of the rehabilitation plan in consultation with the transaction legal counsel and auditors/accountants engaged by the company for such purpose and present the same for approval of the board for submission before the relevant competent court,” read the notice.

The scheme is, however, subject to its approval by the creditors and shareholders and sanction of the competent court as per the requirement of the relevant law and requisite approvals to be obtained from competent authorities.

The development comes after Hascol announced its financial results for the year ending 31 December 2021 on Tuesday.

The company recorded a loss of Rs7.6 billion during the 12-month period (loss per share of Rs7.58), a massive reduction from the negative earnings of Rs23.5 billion in the same period of 2020.

The company managed to earn positive Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) of Rs1.354 billion compared to the previous year's negative EBITDA of Rs11.771 billion.

Hascol said that "despite the non-availability of working capital lines from banks, credit support from the company's single majority shareholder, Vitol, played a vital role in this achievement".

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