Press Release

JCR-VIS Reaffirms Entity Ratings of Hascol Petroleum Limited

Karachi, June 28, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the medium to long term entity rating of ‘A-’ (Single A Minus) and short term rating of ‘A-2’ (A-Two) assigned to Hascol Petroleum Limited (Hascol). Outlook on the medium to long-term rating is ‘Stable’.

The company is planning to mobilize Rs. 300m by way of issuance of Commercial Paper (CP) for a period of 6 months. As per the structure, funds from the CP will be placed in a mark-up bearing term deposit account with a commercial bank against which a Letter of Credit (LC) amounting to Rs. 500m, in favor of local refineries will be established. The expiry of the LC is given to coincide with that of the CP and thereafter the term deposit will be en-cashed to pay back the lender or rolled over for a subsequent term. It is expected that up to the specified amount, this arrangement would not place stress on the debt servicing ability of the company.

Funds from operations provide adequate coverage against the company’s current debt servicing requirements. Hascol is also under the process of being listed shortly and expects to raise Rs. 425m by way of initial public offering. The additional capital is expected to ease funding needs for the completion of an under-construction storage depot, and also make available a permanent source of running finance for future business requirements. Gearing and leverage indicators have seen some weakening by the end of 1QFY13, however with the capital injection expected soon, easing of the same is expected. Further increase in sales, in volumetric terms may play a significant role in allowing the company to build an adequate cushion for debt repayments.

Timely completion of the Shikarpur depot has also been accounted for in the assigned ratings as well as the addition of the storage facility, on lease, at Port Qasim to ease transfer of imported/local product to the onward supply system for country-wide sales. With four storage facilities under use and another depot expected to reach completion before the year end, uninterrupted product supply to the retail network is likely to further boost sales, going forward.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at (021)35311861-70 or fax to (021)35311872-3.

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