Karachi October 7 2024: The most significant item on TRG Pakistan balance sheet is the value of the Company’s share in TRGIL.
As of June 30, 2024, the value of our share in The Resource Group International Limited (TRGIL) is Rupees 40.5 billion, representing a decrease of Rupees 37.6 billion compared to Rupees 78.1 billion on June 30, 2023.
This decrease is due to a net loss incurred by TRGIL during the financial year, due to debt restructuring of Artificial Intelligence Enterprise Software and also due to a weakening of the US Dollar compared to the Pakistan Rupee.
In addition to the Company’s stake in TRGIL, it also has other assets of Rupees 0.04 billion and liabilities of Rupees 7.3 billion (primarily relating to deferred taxes) resulting in net assets of Rupees 33.3 billion.
TRG Pakistan indirect portfolio company that provides Artificial Intelligence Enterprise Software (the “AI Software Business” or the “Business”) recently announced in September 2024 that it has agreed to a financial restructuring and recapitalization transaction with its senior lenders, which addresses its debt maturity as well as unsustainable leverage in the current environment. This debt at the Business was incurred primarily between 2019 and 2021. This restructuring, which is expected to close by the end of the calendar year, will significantly reduce the Business’s cash-interest bearing debt and consequently substantially lower its cash interest payments. Following the closing of the restructuring transaction, the majority shareholders of the post-restructuring entity will be its senior lenders, and in addition, other shareholders will include existing preferred shareholders, including The Resource Group International Limited (“TRGIL”), and management of the AI Software Business, on an as-converted and fully-diluted basis. Upon the closing of the restructuring and all its related transactions, the Company’s indirect economic stake in the Business is expected to be substantially retained in percentage terms, on a fully diluted basis.
The restructuring will be implemented via a court process in Bermuda, where the Bermuda holding company’s assets will be transferred, after court approval, to a new holding company in the United States, following which the original Bermuda holding company will be dissolved. With its balance sheet recapitalized and cash interest payments significantly reduced, the Business will be able to better focus on the resumption of growth as well as sharpening its go-to-market strategy in line with its diversifying product base.
