Press Release

JCR-VIS assigns Preliminary Rating of AA- to proposed PTC issue Convertible into Non-Voting Shares of Sitara Chemical Industries Limited

Karachi, June 20, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned preliminary medium to long term rating of ‘AA-’ (Double A Minus) to Sitara Islamic Participation Term Certificates (PTCs) of Rs. 1.0 billion proposed to be issued by Sitara Chemical Industries Limited (SCIL). Outlook on the rating is ‘Stable’. The PTCs will be convertible into non-voting Class B Shares of SCIL.

To rationalize existing long-term debt levels, SCIL plans to issue PTCs of Rs. 1.0b with a Green Shoe Option of further Rs. 500m for a tenor of 5 years. Proposed pre-IPO amount of PTCs is Rs. 750m, of which Rs. 350m will be allocated to existing shareholders excluding Sponsor Shareholders while Rs. 50m will be allocated to employees as preferential allocation. The size of public offering is proposed to be Rs. 250m. The PTC has mandatory yearly conversion into ‘Class-B’ non-voting ordinary shares of SCIL at pre-determined price. The proposed conversion shall take place at 94.3 percent of the value of the issue price of the PTCs while the remaining proportion of the issue price will be redeemed in cash to the PTC holders. The return will be based on a profit and loss sharing arrangement. The profit before tax, depreciation and financial charges attributable to the PTCs will be the basis for determining return to PTC holders. The proportion of profit attributable to PTC holders varies every year.

The assigned preliminary rating of PTC issue takes into account the mandatory conversion feature of a sizeable value of the PTCs into ‘Class-B’ common stocks and its return being based on profit and loss sharing mechanism. The cushion available in the shape of Takaful Reserve account to absorb loss attributable to PTC holders up to a certain extent and the company’s history of profitable operations have also been incorporated in the assigned rating. Furthermore, PTCs will be secured against identifiable assets with 25% margin and PTC holders will have an exclusive charge over those assets.

Rating of the PTCs will be finalized after examination of legal documents and the necessary corporate and regulatory approvals.

For further information on this rating announcement, please contact Mr. Javed Callea or Ms. Sobia Maqbool, CFA at 021-35311861-70 or Fax at 021-35311872-73.

Jamal Abbas Zaidi
Deputy CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-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 2013 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited