Lahore: The Pakistan Credit Rating Agency (PACRA) has maintained the rating of 3 year structured term loan facility of PKR 420mln issued by Spencer and Company Limited (SCL) at ‘AA’ (Double A). The rating denotes very low expectation of credit risk and very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
The ratings reflect the sound security structure of the structured finance facility. SCL (the lessor) is directing the rent (being received from Unilever Pakistan Limited, the lessee) to Askari Bank against the finance facility.
Under the structure of the loan, cash flows arising on account of rent receivable from UPL are exclusively assigned for the repayment of the loan; hence transferring the risk to UPL. During the term of the facility, the tripartite lease agreement cannot be altered/terminated without prior written consent of the lender.
Meanwhile, UPL has undertaken to unconditionally cover the payment of total outstanding amount of the facility and related mark-up component directly to Askari Bank.
The rating reflects UPL’s strong financial profile, backed by its healthy cash flow position and low leveraged capital structure. However, any significant deterioration in the financial profile of UPL, though unlikely, may have negative impact on the rating.
Term loan facility: The facility is for a sum of PKR 420mln at a mark-up rate of 3month KIBOR plus 100bps for a tenor of 3 years. The principal repayment is to be made in twelve equal quarterly instalments, which began in Nov-10 (Current Outstanding Principal: PKR 279mln).
For more information, contact:
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