Pakistan Credit Rating Agency Limited assigns preliminary rating to Proposed Sukuk by TPL Trakker

Lahore, February 18, 2016 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has assigned a preliminary rating of “A+” (Single A Plus) to the proposed, unlisted and secured Sukuk of PKR 500mln to be issued by TPL Trakker Limited (TPL). The rating denotes a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The preliminary rating of proposed Sukuk reflects the strong security structure of the Sukuk. Sukuk holders, in addition to ranking charge on current assets, would have charge on shares of TPL Properties Limited (TPPL). These shares will be pledged to Investment Agent with 20% margin on marked to market basis, or fair value (if unlisted), every quarter. Each repayment (principal + profit) would have a grace period of 15 days after due date. In the event of delay in repayment by due date, the Investment Agent shall be entitled to divest pledged shares to enable repayment of due instalment within the grace period.

An Escrow account will be active from the issue of the instrument to one year time period after listing of TPL Properties shares. TPL will deposit, into this account, 1/12th of the redemption amount, including profit, by the 15th of each month. The pattern of build-up in Escrow should ensure, in advance, availability of requisite amount prior to each upcoming instalment. If the required amount is not deposited in Escrow account, the Investment Agent will (a) notify TPL to make the payment within next 15 days, and (b) start arrangements to divest the pledged shares.

The rating incorporates TPL’s leadership position in tracking industry, emanating from its diverse product portfolio and superior technology infrastructure. The company is poised to expand tracking business in the international market. Meanwhile, ventures on the cards include online payment solution – TPL Rupiya – and E-Commerce in collaboration with an established international player.

Funding from Sukuk, while supporting expansion initiatives, shall be utilized to meet working capital needs of core operations. In the ongoing period, sizeable proceeds against sale of an investment have provided resilience to cash position. Sustainability, from incremental cash flows from core operations, going forward, remains important for coverages which are currently subdued to some extent. The rating of Sukuk is dependent upon compliance with all major covenants.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com