The Pakistan Credit Rating Agency (PACRA) has assigned a final rating of "AA" (Double A) to the proposed, listed, and secured Sukuk of PKR4,000mln to be issued by Engro Corporation Limited (ECL). The rating denotes a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.
The rating reflects sizable and sustainable improvement in the consolidated risk profile of ECL. As a holdco, ECL has a diverse pool of subsidiaries operating in different non-financial sectors of the economy. ECL has benefited from some of the latest ventures which have started bearing fruits for the company. With this ripening, ECL is expected to experience further ease in its overall risk profile. The rating also takes comfort from ECL's articulated mandate which in a structured manner targets development of a central pool of executive management, a focused strategy-setting function, and nurturing of governance framework. Meanwhile, the security structure of Sukuk alongwith a 25% margin lends support to the rating.
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About the Sukuk:
The Sukuk (PKR4,000mln) has two tranches; a) a tenor of 3 years (PKR3,000mln) and b) a tenor of 5 years (PKR1,000mln). The expected profit rate on the instruments would be 13% and 13.5% respectively. Profit will be paid semi-annually. Principal repayment will be at the end of the tenor or early through put option to be available to Sukuk holders.
Security Structure:
The Sukuk has been secured by way of first ranking paripasu floating charge over all the present and future movable properties (including investments) of Engro Corporation Limited but excluding present and future trademarks and copyrights of Engro Corp. and excluding its shares in Engro Powergen Qadirpur Limited, Engro Foods Limited, and Engro Polymer & Chemicals Limited at 125% of the outstanding principal amount.
Put Option:
Investors have the option to pre-maturely redeem the outstanding Sukuk any time from the Date of Investment subject to a service fee with 15 days prior written notice. Redemption is expected to be met through internal cash flows / stand-by funding lines.
© Press Release 2014
