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The Pakistan Credit Rating Agency (Pacra) has assigned "AA" (Double A) rating to the proposed listed and secured TFC issue of PKR 2,500 million by Engro Chemical Pakistan Limited (ECPL). The rating denotes a very low expectation of credit risk emanating from a very strong capacity for timely payments of financial commitments.
The rating reflects Engro's relatively low business risk emanating from a stable, indeed growing fertilisers demand amidst continuing domestic supply deficit. The rating also takes into account the company's well-conceived strategy of fortifying its position through a sizeable urea expansion project.
Meanwhile, the company's standalone financial profile is expected to remain intact after planned spin-off of fertiliser operations, along with all related assets and liabilities, to a wholly owned subsidiary - Engro Fertiliser Limited.
About the TFC issues: ECPL is in process of issuing TFCIII of PKR 2,500 million (including green shoe option of PKR 500 million), with a tenor of 7 years, carrying profit based on of 6-month KIBOR plus 2.40 percent.
The principal repayment will be in 10 semi-annual instalments, starting from the 30th month from the issue date. The TFC is secured by second ranking charge on the assets of the company with a 25 percent margin, which shall be upgraded to first pari passu charge on all present and future fixed assets of Engro within 90 days from the date of Pre-IPO disbursement.-PR

Copyright Business Recorder, 2009

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