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ISLAMABAD: Minority shareholders in an offshore holding company that owns most of K-Electric have been ordered to withdraw their petition in the Sindh High Court (SHC) that blocked main shareholder IGCF from joining the board, IGCF said on Friday.
Infrastructure and Growth Capital Fund SPV21 (IGCF) told Reuters it had filed a case against the petition in a court in the Cayman Islands and received a positive judgment. The news agency said it was not immediately able to verify the court ruling.
The IGCF owns a 53.8 per cent shareholding in Cayman Island-registered KES Power Ltd, which in turn owns 66.4pc of KE
The Cayman Islands court’s order was directed at Saudi Al Jomaih Power and its partner Denham Investments, the minority shareholders of KES Power, a Cayman Islands-based firm that owns majority shares in K-Electric.
The “other shareholders” — i.e. Al Jomaih and Denham — shall “forthwith terminate or otherwise discontinue the proceedings” started by them in the SHC for declaration and permanent injunction issued on Oct 21, 2022, against IGCF and others, including Alvarez and Marsal, KES Power and K-Electric.
“For the avoidance of doubt, the Other Shareholders shall forthwith take steps to cause the order of the High Court of Sindh at Karachi, Pakistan in the Pakistan Proceedings dated 21 October 2022 to be set aside,” the financial services division of Cayman Islands’ Grand Court said.
The court order said that while it would continue further proceedings to settle other issues, the “other shareholders” might continue the Pakistan proceedings against the government of Pakistan, the National Electric Power Regulatory Authority and the Securities and Exchange Commission of Pakistan “to the extent of applying for and pursuing relief to exercise their duties, rights or powers in relation to KE or KESP that does not prevent the IGCF from exercising its rights under the shareholders’ agreement”.
Both IGCF and Al Jomaih had diverging interpretations of the court order. K-Electric, the Karachi-based integrated power utility, declined to comment.
The IGCF said the Cayman Islands court — having the rightful jurisdiction over KES Power Ltd, the majority shareholder of KE and registered in the Cayman Islands — ordered the other party to withdraw their petition in the Sindh High Court, blocking IGCF from appointing their nominated directors on K-Electric’s board.
The IGCF said the Cayman Islands court had also ordered KESP’s minority shareholders (Al Jomaih, etc.) to abide by the provisions of the Cayman law, which governed KES Power, which owns 66.4pc of KE, and its shareholders’ agreement.
The court order “will clear any doubts that had been created by the SHC stay order, as to the rights of IGCF to appoint their nominees to KE’s board and for all stakeholders to focus on delivering affordable and reliable electricity to Karachi”, it said.
On the other hand, the Saudi business tycoon Shan Ashary on behalf of Saudi Arabia’s Al Jomaih and Kuwait’s NIG said that the court documents “are under seal and the only thing we want to say is that time has been given to original shareholders (Al Jomaih) for further hearing and appeal”.
Al Jomaih and Kuwait’s NIG “hold 46.4pc of the shares in KES Power, which in turn has controlling stake in KE, whereas the remaining shares of KESP are held in SPV21 (53.6pc) of which the New Shareholders (IGCF) claim to own 70pc”, he said.
“This court order merely documents the court’s previous judgement of July 20. In effect, the Cayman court has only partially granted the relief sought by SPV 21 and recognises that there are important public policy matters which the Pakistan courts and authorities must be allowed to determine and are bound to take very seriously,” Mr Ashary said.
He said K-Electric was an important asset and Al Jomaih and Denham remained committed to the people of Karachi and the success of K-Electric. “In recognition of that point, the Cayman Court permits the Pakistan Proceedings to continue with the Government of Pakistan through the Privatisation Commission and power division secretaries, Nepra and SECP,” he added. “We are grateful to the Cayman Courts for recognising that this is a sensitive matter for the people and government of Pakistan with implications and national security. Nothing in the Aug 16 order can be implemented till a second hearing takes place which is scheduled for some time in October,” Mr Ashary added.
The IGCF was owned by Arif Naqvi’s Abraaj Capital but taken over by Shehryar Chishty’s AsiaPak Investment after Mr Naqvi’s troubles with US investors led to his arrest and conviction.
Mainly because of a dispute between the IGCF and original shareholders and claims and counterclaims between KES Power and the government of Pakistan, Shanghai Electric’s bid for taking over around 64pc shareholding along with management control had been hanging in the balance since 2016.
Published in Dawn, August 19th, 2023
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