Press Release

VIS Reaffirms Ratings of International Brands Limited

Karachi, May 21, 2020: VIS Credit Rating Company Limited (VIS) has maintained the AA (Double A) rating assigned to outstanding Sukuk issue of International Brands (Private) Limited (IBL). Rating of the Sukuk issue has been placed on ‘Rating Watch-Developing’ Status pending finalization of the legal documents post restructuring agreement reached with investors. Entity ratings of IBL have been reaffirmed at A/A-2 (Single A/ A-Two). The outlook on the assigned entity rating is ‘Stable’. Previous rating action was announced on April 04, 2019.

IBL raised Rs. 2.83billion through a Sukuk issue in FY18. Security structure of the Sukuk entails pledge of shares of Searle Company Limited (Searle). Repayment of the Sukuk as per the restructuring arrangement was revised to a monthly basis (from bullet payment) whereby IBL was supposed to pay monthly Rs. 120million to Sukuk certificate-holders. IBL had paid 9 installments (out of a total 28 installments) to Sukuk certificate-holders till April 2020. However, in light of the impact of COVID-19 on the Group, a deferment of the principal payment had been sought from the Sukuk certificate-holders. The deferment of principal payment has been agreed for a 6 month period (quarterly profit payment would continue during the period) subsequent to which monthly installment payment to Sukuk certificate-holders would commence from November 2020. Ratings assigned to the Sukuk take into account fall back debt servicing mechanism of the Sukuk issue that carries the feature of timely sale or convertibility into shares of Searle, to the extent of any shortfall prior to due date for each installment.

Assigned entity ratings incorporate IBL’s strong investment portfolio with major investments in The Searle Company Limited (Searle) and IBL Operations (Private) Limited (IBL Operation). These two subsidiaries have historically been the major contributor to revenues in form of dividend income. Searle (rated ‘AA-/A-1’ by VIS Credit Rating Company) is one of leading local pharmaceutical firm with a diversified product portfolio & therapeutic area coverage. Financial performance of Searle has remained strong in the ongoing year. Besides dividend income from Searle and IBL Operations, IBL also receives corporate finance income for support services to group companies and cash inflows from sale of asset. VIS expects Company’s cash flow proceeds to be sufficient for debt servicing requirements over the rating horizon.

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) or the undersigned (Ext. 306) at 021-35311861-70 or email at .

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Rating the Issue (June 2016)

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