Pakistan Credit Rating Agency Limited revises ratings of Pak Elektron Limited

Lahore: The Pakistan Credit Rating Agency (PACRA) has revised the long-term and the short-term entity ratings of PEL to ‘BBB’ (Triple B) and ‘A3′ (A Three), respectively Previous: A-/A2]. Meanwhile, the ratings of the privately placed secured Sukuk issues of PKR 1,200m1n and PKR 1,l00mln have been revised to ‘BBB+’ (Triple B plus) Previous: A]. These ratings denote that the capacity for timely payment of financial commitments is considered adequate.

The ratings reflect continuous pressure on the company’s financial profile mainly emanating from cash flow constraints, thereby impacting its debt servicing capacity. The management of the company is actively pursuing rescheduling of its long term debt obligations.

In this regard, syndicate borrowings (~ two third of the total borrowings) including the sukuks issued by the company have been granted additional grace period of two years from Jun-11, while negotiations are in process for the rescheduling of balance borrowing (mainly a bilateral arrangement). The ratings would continue to remain under watch till finalization of the arrangements.

In terms of its business prospects, PEL, lately, has experienced improvement. It is receiving good order flow in its power division. Meanwhile the response of the latest launch of refrigerator (single largest contributor to total revenue) is encouraging. Improvement in business profile particularly targeted sales and desired conversion in cash remains critical for the company to create cushion for timely servicing of debt liabilities.

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

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