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The Pakistan Credit Rating Agency Limited

Date
30-Aug-2017
Analysts
Jhangeer Hanif
jhangeer@pacra.com

Rohail Amjad
rohail.amjad@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Debt Instruments Rating Methodology (Jun 17) [View]
  • Corporate Rating Methodology (Jul 17) [View]

Related Research

  • Sector Study | Tracking Services (Feb 17) [View]
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PACRA ASSIGNS PRELIMINARY RATING TO PPTFC OF TPL TRAKKER
 Rating Type Debt Instrument
Current
(30-Aug-2017)
 Action Preliminary
 Long Term AA-
 Short Term 
 Outlook Stable
 Rating Watch -

TPL Trakker Limited is issuing an unlisted and privately placed term finance certificate of PKR 1,200mln including a green shoe option of PKR 200mln. The objective is to acquire stake in TPL Direct Insurance Limited. The PPTFC would have a multi-tiered security structure. Primarily, the PPTFC would be secured through pledge of shares of TPL Direct Insurance (rated A+ by PACRA) with a 25% margin. The repayment of PPTFC has been secured through additional credit enhancements. The Principal redemption shall be paid by the issuer from proceeds of issues of further equity of the issuers to be completed prior to the date of payment of first instalment of the Principal Redemption. Until payment of the Principal Redemption and interest thereon, the proceeds of any equity issuance by the issuer shall be under lien and shall not be utilized for any purpose other than toward payment of the Principal Redemption. In relation to the foregoing commitment, following undertakings (in the form of acceptable to the Lead Advisor & Arranger) shall be furnished by TPL Holdings (Private) Limited (“TPL Holdings”) (sponsor company of the issuer):
i) That TPL Holdings shall not reduce its existing shareholding in the Issuer until full payment of the Principal Redemption and interest thereon, ii)That TPL Holdings shall procure that the Issuer undertakes further issue of equity in accordance with applicable to law prior to date of payment of first instalment of the Principal Redemption and TPL Holding shall subscribe to its proportionate share in the additional equity issuance in available cash, iii)That TPL Holding is entitled to seek disbursement of up to PKR 300 million for the purpose of funding subscription of further shares in the issuer through committed and available financing for the benefits of TPL Holding(“Debt”), iv)That the Debt shall remain un-utilized by TPL Holding for any purpose other than for the purpose of funding subscription of further shares in the Issuers.

The sustained compliance with the articulated terms and conditions is essential to the rating.

About the Entity
TPL Trakker Limited (TPL), listed on Pakistan Stock Exchange, is Pakistan’s largest vehicle tracking and fleet management company operating with a network of 9 branches, catering to 150,000 customers’ tracking needs. Majority (53%) owned by TPL Holdings (Pvt) Limited (THL), which, in turn, is equally owned by Ali Jameel and Ali Bhai families. THL has strategic investments in insurance, real estate, security services, life insurance and navigation service.Eight member board of directors including the CEO; six representative of THL and two independent members. CEO, Mr. Ali Jameel, is a Chartered Accountant from England & Wales and has diversified experience in managing various business ventures.COO, Mr. Sarwar Ali Khan, oversees commercial operations, while the financial and technological matters are kept with the CEO.

About the Instrument
The instrument will have a life of 2 years with a grace period of one year. The issue date of the instrument will be that on which the amount of instrument will be disbursed .Instrument is likely to be issued at 3Months KIBOR + 1.25%. Interest will be payable quarterly in arrears.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.
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