Press Release

VIS Assigns Entity & Sukuk Ratings to Park View Enclave (Private) Limited

Karachi, October 23, 2019: VIS Credit Rating Company Limited has assigned preliminary rating of AA- (Double A Minus) to the proposed TFC/Sukuk issue of Park View Enclave (Private) Limited (PVEPL). The Company has also been assigned initial entity ratings of ‘A/A-2’ (Single A/A-Two). Outlook on the assigned ratings is ‘Stable’.

PVEPL is a part of Vision Group of Companies that deals in real estate projects in Pakistan and is owned largely by Mr. Aleem Khan, a prominent businessman and politician. The Company is in the process of development of “Park View City” (PVC) project at Mouza Malote Zone 4B, Islamabad. PVC is a housing scheme targeting the middle class segment of the society. Total planned area for the project is estimated at 9,487 Kanal, out of which 4,274 Kanal has already been acquired, infrastructure development work on which is under progress. Total saleable area is expected to clock in around 47.2% of the available space which equals 4,708 Kanal. PVC was launched in June 2018 and till end-August 2019, the company has sold residential and commercial plots accumulating 1,086 Kanal (Around 23% of the saleable area). Consequently, the company still has a sizeable portion of acquired land that can be sold.

The assigned ratings to PVEPL reflect moderate business risk and strong financial profile of the company. Assessment of business risk profile take into account strong brand name developed over the years, within the city location of the project, security features and amenities on offer. Financial risk profile incorporates healthy margins cash flows where debt servicing cushion increases over the rating horizon. Ratings remain dependent on undertaking planned improvements in corporate governance framework (conversion to Public Unlisted Company, improving board composition & oversight and strengthen internal controls) which are expected to facilitate in business continuity. Timely completion of key milestone without any significant cost and time overruns while maintaining healthy sales velocity and collection efficiency, as projected, will remain critical to avoid cash flow mismatches and will be the key rating sensitivities, going forward.

The assigned ratings to the Sukuk incorporate structural features of the Sukuk. Principal amount of the Sukuk is Rs. 7 billion (inclusive of green shoe option of Rs. 4 billion) and will have a tenor of 4 years inclusive of a grace period of 1.5 years. The debt shall be exclusively utilized for development and expansion of Park View’s real estate projects. The instrument will be secured and serviced through the following mechanism:

· Receivables from existing (aggregating to Rs. 15.7 billion) and future sales from PVEPL and Park View Villas Project, Lahore to be deposited in a specified Project Monitoring Account (PMA). Financing Service Reserve Account ‘FSRA’ will be funded on a monthly basis in equal proportion equivalent to the next payment obligation (Principal and Profit payment).
· Mortgage on Prime Properties (outside the project having approximate market valuation of Rs. 3.7 billion) and land owned by the issuer and other companies of the sponsor aggregating to Rs. 43.1 billion
· Pledge of shares of the following 4 companies - a) Park View Enclave (Pvt.) Limited, b) Union Green (Pvt.) Limited, c) Raja Green (Pvt.) Limited; and d) Luxury Green (Pvt.) Limited
· Personal Guarantees of sponsors.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 207) at 35311861-70 (10 lines) or fax to 35311873.

Javed Callea

Applicable Rating Criteria: Industrial Corporates - 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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited