Press Release

JCR-VIS Assigns Preliminary Rating to the Sukuk issue of Crescent Steel and Allied Products Limited

Karachi, December 26, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned preliminary rating of A+ (Single A Plus) to proposed Sukuk issue of Crescent Steel and Allied Products Limited (CSAPL). Outlook on the assigned rating is Stable.

CSAPL is in the process of raising a Sukuk amounting to Rs. 1b (inclusive of a green shoe-option of Rs. 200m). Tenor of the Sukuk will be 5 years (inclusive of 1 year grace period). Funds raised from the Sukuk will primarily be utilized for reprofiling of the balance sheet and retiring existing short-term debt in order to make funds available for working capital requirements of upcoming projects. Rating assigned to the Sukuk incorporates structural features of the Sukuk which entail first pari-passu charge (including a 25% margin) on all present and future fixed assets of the subsidiaries. Moreover, a debt servicing reserve account (DSRA) will be created whereby one peak quarterly installment (principal+profit) in advance will always remain deposited in the DSRA. Debt payment mechanism also entails progressively retaining upcoming installment.

JCR-VIS has assigned entity ratings of A/A-2 (Single A/A-Two) to CSAPL. The assigned ratings reflect CSAPL’s diversified operations (exposure to steel, textiles, capital markets and power sectors), low leveraged capital structure, adequate liquidity profile, sound debt servicing ability and strong corporate governance framework. Ratings are constrained by the cyclical business risk of the steel segment which comprises bulk of the company’s revenues. Going forward, orders in hand along with improved margins and dividend income are expected to support profitability in FY19. Sizeable liquid investment, both on the books of CSAPL and CS Capital (Pvt.) Limited, will provide buffer in case of volatility in cash flows. These investments are however subject to market risk.

For further information on this rating announcement, please contact the undersigned (Ext: 207) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi

Applicable Rating Criteria: Industrial Corporates (May 2016)

Applicable Rating Criteria: Instrument (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