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The Summit Power International Limited (SPIL) has made an urgent plea to the government to remove Summit Group from the list of companies in a recent notice of the taxman suspending transfer of share.
Incorporated in Singapore, the SPIL made the plea in a letter, dated 04 October 2024, sent to the advisers of power, energy and mineral resources ministry and finance ministry seeking cooperation to safeguard investors' right.
"The notice issued by NBR suspending Summit Group's right to transfer shares has compromised the lenders' rights under the project security package and consequently violates section 10.1 of the respective project companies' implementation agreements," wrote Wu Yan Bin, chief financial officer of SPIL.
It said share transfer was a key feature in security package for project finance lenders, providing assurance and protection for their loans.
Share pledges enable lenders to gain control over the project company in case of default, according to the notice.
It has requested the government to exclude Summit Group from the list of companies named in the notice addressed to the office of the Registrar of Joint Stock Companies and Firms (RJSC) suspending any transfer of shares.
The National Board of Revenue (NBR) has issued the letter to the RJSC on September 29.
The SPIL is the parent company of the Summit Corporation Limited Bangladesh and all its subsidiaries.
"Any restrictions on transfer of shares imposed by authorities would erode the security package and trigger an event of default under relevant loan agreement. In addition, there is a potential concern that such events of default could lead to further cross-default, resulting in far-reaching detrimental impact," wrote the letter.
Share transfers are generally the essential first step for lenders to exercise step-in rights that is crucial for project finance lenders to take control of a project in case of borrower default or non-performance, it added.
The Summit Corporation Ltd and Summit Power Ltd have furnished share pledges to senior lenders of the eight project companies as security for the respective projects include Summit Narayanganj Power Unit II Ltd, Summit Barishal Power Ltd, Ace Alliance Power Ltd, Summit Gazipur II Power Ltd, Summit Meghnaghat Power Company Ltd, Summit Meghnaghat Power Company II Ltd, Summit LNG Terminal Co Pvt Ltd and Summit Bibiyana Power Company Ltd.
The company also found difficulties in opening letter of credit required for importing liquid fuel for power plants as fear factor persists in the banking sector regarding the NBR's notice.
"Constantly, Summit's liquid fuel power plants are unable to comply with the dispatch instructions issued by the Bangladesh Power Development Board (BPDB)," it said.