Engro notifies proposed sale of 29 percent ETPL shares

Engro Corporation (Engro) notified Pakistan Stock Exchange (PSX) about its proposed sale of up to 29 percent shares of Elengy Terminal Pakistan (ETPL) against likely proceeds of $38 million subject to all corporate and regulatory approvals. "We estimate potential gain on sale from this transaction of Rs 6.4/sh," an analyst at Topline Securities said.
ENGRO has 80 percent stake in ETPL at book value of Rs 1.6 billion. The gain will likely be recognized in company's unconsolidated P&L only as Engro is retaining controlling stake, he added. "As per our estimates, ETPL's contribution to Engro's consolidated earnings is Rs 3-3.5/sh," he said. The above stake sale will result in immediate net reduction in recurring earnings of around Rs 0.5/sh (after accounting for investment of amount raised in short term paper). "We believe amount from stake sale will likely be reinvested by Engro," he added.
REUTERS ADDS: Global independent tank storage company Vopak said on Friday it has inked an agreement with Engro Corp Ltd to buy a 29 percent stake in Pakistan's first liquefied natural gas (LNG) import facility.
Vopak will invest in Elengy Terminal Pakistan Ltd, whose subsidiary Engro Elengy Terminal Pte Ltd (EETPL) owns the LNG facility in the country's Port Qasim, it said in a statement, without giving the investment amount.
"This new step in our cooperation gives Vopak an excellent entry in the growing Pakistan LNG market," Eelco Hoekstra, Chairman of the Executive Board and Chief Executive Officer of Vopak, said in a statement.
"This fits very well our ambitions to grow and diversify our service offering in LNG."
The transaction is expected to close in the fourth quarter, Vopak said.
Jefferies analysts said in a note that the acquisition will cost $38 million.
The facility, which started operations in 2015, consists of an LNG jetty and a pipeline connected to a Floating Storage and Regasification Unit (FSRU) which has been chartered by EETPL for 15 years.
The pipeline supplies gas directly to the grid of EETPL's sole customer, state-owned Sui Southern Gas Company Ltd. The facility is adjacent to the Engro Vopak chemical storage terminal jointly owned by the two companies.