Press Release

JCR-VIS reaffirms Entity ratings of Superhighway Construction Operation and Rehabilitation Engineering (Pvt.) Limited

Karachi, November 30, 2018: JCR-VIS Credit Rating Company Limited has reaffirmed entity ratings of Superhighway Construction Operation and Rehabilitation Engineering (Pvt.) Limited (SCORE) at ‘AA-/A-1’ (Double A Minus/A-One). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on October 21, 2016.

Superhighway Construction, Operation & Rehabilitation Engineering (Private) Limited (SCORE) has been primarily formed for conversion of 4-lane Karachi-Hyderabad Superhighway into 6-Lane motorway (M-9) on build, operate and transfer basis. The company has entered into a concession agreement with National Highway Authority (NHA) for a period of 25 years starting in March 2015.

Project construction began on October 10, 2015 and was expected to be completed by April 2018. However, some delays were observed and the project was finally completed in June 2018. No liquidated damages or additional interest costs were incurred by SCORE due to delays as the same were observed as a result of encumbrances that National Highway Authority (NHA) was supposed to clear. The company received substantial completion certificate from the Quality Assurance Inspector (QAI) in June 2018. At present, 133.8km out of the total mandated distance of 136.0km has been established and is open to traffic. As per the agreement with a third party, a diversion has been established presently for the remaining 2.2km.

The assigned ratings incorporate sound profile of the sponsor, Frontier Works Organization (FWO), which holds 100% shares of the company. Experience of FWO in executing similar infrastructure projects in the past and presence of sponsor’s irrevocable and unconditional standby guarantee in favor of SCORE for debt repayments is considered important from ratings perspective.

Ratings draw further comfort from higher than projected traffic volumes. However, actual revenue collected during the first three months of FY19 is lower than projected revenues primarily due to lower than projected distance travelled by commuters. The ratings are dependent upon FWO support for debt servicing whenever needed to make up for any short fall in cash flows from toll generation.

Jamal Abbas Zaidi

Applicable Rating Criteria: Toll Roads (November 2018)

Industrial Corporates (June 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2018 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited