The Pakistan Credit Rating Agency Limited (PACRA) has maintained the long-term and short-term entity ratings of Pak Libya Holding Company (Private) Limited [PLHC] at AA- (Double A minus) and A1+ (A one plus), respectively. Ratings of PPTFCs of PKR 750mln and PKR 1,000mln have been maintained at AA (Double A).
The ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.
The ratings reflect sovereign parentage - jointly owned by Governments of Pakistan and Libya. The company's performance improved as revenues increased mainly owing to higher other operating income. Meanwhile, managed cost structure and provisioning reversal resulted in better profitability.
The management is pursuing recovery in its largest non-performing exposure - Kamoki Energy Limited. Success in materialization of efforts would support earning profile of the company. PLHC, envisaging a well-conceived strategy, aims at improving performance while building asset side - mainly finances book and investment portfolio. The ratings draw comfort from cohesiveness in the management team and improving technological and operational framework.
The ratings have "negative outlook", signifying the need to comply with regulatory minimum capital requirement (shortfall of PKR 2.4bln as at end-Mar15).
However, given no committed plan from the government of Pakistan yet, this may continue so. Nevertheless, the management's ability to develop stable revenue stream and improving asset quality remains important to maintain the ratings.
PLHC, established as a joint venture institution in 1978, is equally owned by the Government of Pakistan and Libya through SBP and Libyan Foreign Investment Company (LAFICO), respectively. The six-member board has equal representation of both the sponsor countries. Mr. Abid Aziz (MD & CEO), an MBA, has been associated with the company since 1983. The DMD - Mr. Khald Benrjoba - is the representative of LAFICO.
The TFC issues:
PLHC has issued a secured PPTFC of PKR 750mln for five years tenor (final repayment by Feb-2016). The profit is payable at 6M KIBOR plus 160bps semi-annually in arrears. PPTFC is secured by a First Pari Passu charge by way of hypothecation over loans and lease receivable of PLHC with 25% margin. The company has also issued another secured PPTFC amounting PKR 1,000mln in Feb-2015.
The profit payment is payable quarterly in arrears, based on 3M KIBOR plus 150bps. The PPTFC is secured by First Pari Passu Charge by hypothecation over all present and future current and fixed assets (excluding land and building) of the company with 25% margin. The final repayment would be made in Feb-2020.