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TERM FINANCE CERTIFICATES (TFCs)

6 Months Ended

Jun. 30, 2023

14. TERM FINANCE CERTIFICATES (TFCs)

	June 30, 2023			December 31, 2022
	(Unaudited)
Opening balance	$	7,458,750		$	7,847,937
Repayments		-			(389,187	)
		7,458,750			7,458,750
Current portion		(2,144,511	)		(2,463,737	)
		5,314,240			4,995,013
Add: Deferred markup		952,619			1,421,704
Exchange adjustment		(3,625,943	)		(2,373,910	)
Closing balance	$	2,640,916		$	4,042,807

Term finance certificates (TFCs) have a face value of $17.42 per certificate. These TFCs carry mark up at the rate of six months average KIBOR plus 1.0% per annum (2022: six-month average KIBOR plus 1.0% per annum), payable quarterly. The mark up rate charged during the six months ended June 30, 2023, on the outstanding balance ranged from 17.10% to 22.15% (December 31, 2022: 8.76% to 17.10%) per annum.

IGI Holding Limited (previously IGI Investment Bank Limited) is the Trustee (herein referred to as the Trustee) under the Trust Deed.

The liability of these TFCs has been rescheduled in December 2012 and then on April 03, 2015. During the year ended 31 December 2018, third rescheduling of these TFCs was successfully executed through signing of the Third Supplemental Trust Deed between the Trustees and the Company.

In accordance with the 3rd Supplemental Trust Deed executed during the year ended 31 December 2018, the outstanding principal is repayable by way of quarterly staggered instalments with downward revision in interest of 0.60% i.e. revised interest rate of six months average KIBOR + 1%. The outstanding interest payable as at the date of restructuring and up to December 20, 2018 is agreed to be deferred and shall be paid from March 20, 2021 in quarterly instalments. 50% of the interest accrued for the period between December 20, 2018, to December 20, 2020, shall be paid on regular quarterly basis commencing from March 20, 2019, and the remaining 50% shall be deferred and paid from March 20, 2021. Interest deferred has been measured at present value. Under the revised term sheet, these TFCs are due to mature on September 20, 2026.

The other main terms included appointment of one representative as a nominee director nominated by the Trustee which has been complied with. Further, 175 million sponsor's shares were pledged for investors which was to be released with quarterly scheduled principal repayments proportionately starting from June 2019. The pledged shares have not been released in proportion to the payments made during the year.

The Company has not paid due quarterly installments of June 2019 to June 2023 amounting USD 1.95 million. In case of failure to make due payments by the Company, Trustee can instruct the security agent to enforce the letter of pledge and sell the quantum of the pledged shares to generate the amount required for the settlement of the outstanding redemption amount.

Last year in January 2022 Trustee has sold 24.63 million shares for the amount of $0.198 million ($0.128 million settled against principal and $0.069 million against accrued mark-up) and in February 2022 Trustee has sold further 25.75 million shares for the amount of $ 0.20 million ($0.12 million settled against principal and $0.08 million against accrued mark-up) to recover o/s installments of June 2019, September 2019 and Dec 2019.

These TFCs are secured against first pair passu charge over the Company's present and future fixed assets including equipment, plant and machinery, fixtures excluding land and building with 25% margin in addition to all rights, benefits, claims and interests procured by the Company under:

	A.	Long Distance and International ("LDI") and Wireless Local Loop ("WLL") license issued by PTA to the Company; and
	B.	Assigned frequency spectrum as per deed of assignment.